Business Combinations (Tables)

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

The following table shows the purchase price in accordance with ASC 805:


Description
Cash consideration to seller	$	2,788.3
Howden's debt settled at close	1,529.0
Settlement of seller transaction costs	67.2
Funds held in escrow	20.4
Working capital adjustment	(17.5)
Total ASC 805 purchase price	$	4,387.4

Schedule of Recognized Identified Assets Acquired in Business Combination

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed in the Howden Acquisition as of the acquisition date:


	Preliminary Estimated Fair Value
Net assets acquired:
Cash and cash equivalents	$	62.5
Restricted cash	2.6
Accounts receivable	427.4
Inventories	268.3
Unbilled contract revenue	167.3
Prepaid expenses	52.6
Other current assets	107.8
Assets held for sale	225.7
Property, plant and equipment	325.1
Identifiable intangible assets	2,442.5
Equity method investments	22.3
Other assets	168.2
Accounts payable	(369.5)
Customer advances and billings in excess of contract revenue	(263.7)
Accrued salaries, wages and benefits	(103.0)
Accrued income taxes	(50.9)
Current portion of warranty reserve	(32.1)
Current portion of long-term debt (1)	(1.4)
Other current liabilities	(91.0)
Liabilities held for sale	(43.9)
Long-term deferred tax liabilities	(670.8)
Operating lease liabilities	(52.3)
Finance lease liabilities	(8.1)
Accrued pension liabilities	(6.0)
Other long-term liabilities	(5.6)
Total identifiable net assets assumed	2,574.0
Noncontrolling interest (2)	(129.3)
Goodwill (3)	1,942.7
Net assets acquired	$	4,387.4

Assets acquired net of cash, cash equivalents and restricted cash	$	4,322.3

_______________

(1)Represents the balance related to short term debt held in Foreign Facilities. Refer to Note 9, “Debt and Credit Arrangements.”

(2)As part of the Howden Acquisition, we acquired a noncontrolling interest, which owns 82% of Howden Hua Engineering Co., Ltd, and entity based in China which is valued at $129.3.

(3)Includes $102.2 allocated to the Roots divestiture. Refer to Note 7, “Goodwill and Intangible Assets.”

Schedule of Identifiable Intangible Assets Acquired

The following table summarizes information regarding preliminary identifiable intangible assets acquired in the Howden Acquisition:

Estimated Useful Lives

Preliminary Estimated Asset Fair Value

Finite-lived intangible assets acquired:

Customer relationships

18 years

1,537.0

Backlog

3 years

134.0

Technology

5 to 14 years

297.0

Total finite-lived intangible assets acquired

1,968.0

Indefinite-lived intangible assets acquired:

Trade names

474.5

Total intangible assets acquired

2,442.5

Schedule of pro forma information

The following unaudited pro forma combined financial information for the three and nine months ended September 30, 2023 and 2022 gives effect to the Howden Acquisition, and the Roots divestiture, as if both 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 following adjustments are reflected in the unaudited pro forma financial table below:

•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,

•amortization of acquired intangible assets,

•an adjustment to reflect the change in the estimated income tax rate for federal and state purposes,

•nonrecurring acquisition-related expenses incurred by Howden prior to the close of and directly attributable to the Howden Acquisition were adjusted out of the pro forma net loss attributable to Chart Industries, Inc. from continuing operations for the periods presented, and

•nonrecurring acquisition-related expenses incurred by Chart and directly related to the Howden acquisition were adjusted out of the pro forma net loss attributable to Chart Industries, Inc. from continuing operations for the periods presented.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Pro forma sales from continuing operations	$	897.9	$	817.8	$	2,642.7	$	2,392.1
Pro forma net income (loss) attributable to Chart Industries, Inc. from continuing operations	9.4		(21.2)		(53.9)		(111.3)

Schedule of Changes in Contingent Consideration

The following table represents the changes to our contingent consideration liabilities:


	SES		BIG		MP		Total
Balance at December 31, 2022	$	16.3	$	1.0	$	—	$	17.3
(Decrease) increase in fair value of contingent consideration liabilities (1) (2)	(9.3)		0.7		(0.2)		(8.8)
Acquired contingent consideration liabilities	—		—		2.9		2.9
Payment of contingent consideration	—		(1.7)		(2.7)		(4.4)
Balance at September 30, 2023	$	7.0	$	—	$	—	$	7.0

_______________

(1)For the three months ended September 30, 2023, the fair value of contingent consideration related to SES decreased by $2.3 (decreased $0.9 for the three months ended September 30, 2022). For the nine months ended September 30, 2023, the

fair value of contingent consideration related to SES decreased by $9.3 (decreased by $1.7 during the nine months ended September 30, 2022). 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.

(2)There was no change in the fair value of contingent consideration related to BIG for the three months ended September 30, 2023 as the earn-out period ended December 31, 2022 and the entire liability was paid during the second quarter of 2023. For the three months ended September 30, 2022, the fair value of contingent consideration related to BIG decreased by $0.8. For the nine months ended September 30, 2023, the fair value of contingent consideration related to BIG increased by $0.7 (decreased by $1.0 during the nine months ended September 30, 2022).