Chart Industries Reports Profit Growth, USA

Chart Industries, a leading independent global manufacturer of highly engineered equipment used in the production, storage and end-use of hydrocarbon and industrial gases, reported results for the fourth quarter and year ended December 31, 2012.

Highlights include:

• Record orders over $1.1 billion for the full year 2012
• Record sales over $1.0 billion, up 28% over full year 2011
• Year-end backlog of $617 million, up 26% from year-end 2011
• Operating income of $121.8 million, up 35% over full year 2011
• Announces $40 million award to provide LNG equipment to PetroChina

Net income for the fourth quarter of 2012 was $20.8 million, or $0.69 per diluted share. Fourth quarter 2012 earnings would have been $0.80 per diluted share excluding $4.5 million, or $0.11 per diluted share, of costs largely associated with the AirSep acquisition. This compares with net income of $8.4 million, or $0.28 per diluted share, for the fourth quarter of 2011. Fourth quarter 2011 earnings would have been $0.51 per share excluding $9.5 million, or $0.23 per diluted share, of refinancing and restructuring costs in that period.

Net income for the year 2012 was $71.3 million, or $2.36 per diluted share. Net income for 2012 would have been $2.50 per diluted share excluding $5.9 million, or $0.14 per diluted share, of costs primarily due to acquisitions. This compares to net income of $44.1 million, or $1.47 per diluted share, for the year 2011. Net income for 2011 would have been $1.84 per diluted share excluding $15.7 million of refinancing and acquisition-related costs.

Net sales for the fourth quarter of 2012 increased 38% to $303.9 million from $219.6 million in the comparable period a year ago. Gross profit for the fourth quarter of 2012 was $85.5 million, or 28.1% of sales, versus $64.0 million, or 29.1% of sales, in the comparable quarter of 2011.

Net sales for the year 2012 improved to a record $1,014.2 million, up 28% from 2011 net sales of $794.6 million. Gross profit for 2012 was $305.2 million, or 30.1% of sales, compared to $245.4 million, or 30.9% of sales, in the full year 2011.

“I am pleased to report a strong fourth quarter to cap off another record year,” stated Sam Thomas, Chart’s Chairman, President and Chief Executive Officer. “Chart continues to demonstrate its ability to respond quickly to new opportunities and changes in the marketplace. Globally, our expansion projects are progressing nicely and, while executing on strong orders, we have been able to significantly improve capacity and lead times in our Distribution & Storage (D&S) liquefied natural gas (LNG) business. We also plan to significantly improve available capacity and lead times in our Energy & Chemicals (E&C) business by the first quarter of 2014.”

“These initiatives are enabling Chart to meet rising customer demand and uphold our status as a leading worldwide supplier to the energy, industrial gas, and biomedical industries, especially in high-growth energy markets such as the build-out of LNG infrastructure,” Mr. Thomas said.

He continued, “Today, we announced an award of approximately $40 million from PetroChina to provide LNG transportable self-contained fueling stations, storage tanks and vehicle tanks to support China’s conversion to LNG as a vehicle fuel for heavy-duty trucks. This award led to record quarterly orders in our D&S group in the fourth quarter and continues to validate our expansion efforts in China.”

Backlog at December 31, 2012 was $617.4 million, up 26% from the December 31, 2011 level of $489.1 million, and 4% lower than the backlog of $639.8 million at September 30, 2012. Orders for the fourth quarter of 2012 were $278.0 million, 19% higher than orders of $233.4 million booked in the third quarter of 2012.

“We are proud of our success to date in capturing a significant share of expanding global LNG equipment demand,” said Mr. Thomas. “We remain optimistic that we will have the appropriate products and capacity available to continue to capitalize on the emerging, secular LNG growth trends this year and at an accelerating pace in future years.”

He continued, “While the LNG infrastructure build-out is advancing at a rapid pace in China, in North America the investments have not as yet accelerated at the rate many had forecast. We do not believe this reflects any decline in interest among the major players. Rather it is a lead time issue related to production scale up of LNG-powered truck engines and construction of LNG liquefaction capacity in the short term. We expect both of these bottlenecks to be resolved over the coming year, likely yielding higher demand in 2014. In the meantime, our capacity additions have positioned us well to exceed customer expectations as we enter the next leg up in demand.”

Selling, general and administrative (SG&A) expenses for the fourth quarter of 2012 increased $12.8 million to $48.0 million compared with the same period in 2011. The increase was largely due to the AirSep acquisition, as well as higher employee-related costs as we continue to invest in growth opportunities. SG&A as a percent of sales was 15.8% compared with 16.0% in the prior year quarter.

Interest expense was $4.0 million for the fourth quarter of 2012, which included $2.3 million of non-cash accretion expense associated with the Company’s Convertible Notes. Therefore, cash interest was $1.7 million.

Income tax expense was $7.7 million for the fourth quarter and represented an effective tax rate of 26.7% compared with $2.7 million for the prior year’s fourth quarter, or an effective tax rate of 24.8%. The full year effective tax rate for 2012 was 29.9%, which compares to 29.7% for 2011.

Cash and short-term investments were $141.5 million at December 31, 2012, which compares to $105.8 million at September 30, 2012. Cash flow from operating activities for the fourth quarter of 2012 was $73.2 million, led by higher net income and working capital improvements during the quarter.

[mappress]
LNG World News Staff, February 28, 2013; Image: Chart