Chart Posts Record Sales in 2013

Chart Industries reported record sales of $1.18 billion in 2013, up 16% over full year 2012.

Net income for the fourth quarter of 2013 was $23.2 million. Fourth quarter 2013 earnings would have been $0.82 per diluted share excluding $3.2 million, or $0.07 per diluted share, of costs largely associated with the AirSep acquisition, as well as a $0.04 per diluted share impact associated with Chart’s Convertible Notes . This compares with net income of $20.8 million, or $0.69 per diluted share, for the fourth quarter of 2012. Fourth quarter 2012 earnings would have been $0.80 per share excluding $4.5 million, or $0.11 per diluted share, of acquisition-related costs in that period.

Chart’s average fourth quarter common stock price exceeded the Notes’ conversion price of $69.03 and our warrants’ strike price of $84.96. This resulted in the inclusion of an additional 1.9 million shares related to the Notes in the Company’s diluted earnings per share calculation for the quarter. The associated hedge, which helps offset this dilution, cannot be taken into account under Generally Accepted Accounting Principles (GAAP). If the hedge could have been considered, it would have reduced the additional shares by 1.2 million resulting in the inclusion of only 0.7 million additional shares related to the Notes. Although the Notes remain convertible at the option of the holders during the current quarter, there have been no conversions to date.

Net income for the year 2013 was $83.2 million, or $2.60 per diluted share. Net income for 2013 would have been $2.94 per diluted share excluding $10.2 million, or $0.23 per diluted share, of costs primarily related to acquisitions, as well as a $0.11 per diluted share impact associated with the Notes. This compares with net income of $71.3 million, or $2.36 per diluted share, for the year 2012. Net income for 2012 would have been $2.50 per diluted share excluding $5.9 million of costs primarily related to acquisitions.

Net sales for the fourth quarter of 2013 were $303.8 million, essentially the same as the $303.9 million in the comparable period a year ago. Gross profit for the fourth quarter of 2013 was $93.8 million, or 30.9% of sales, versus $85.5 million, or 28.1% of sales, in the comparable quarter of 2012.

Net sales for the year 2013 improved to a record $1,177.4 million, up 16% from 2012 net sales of $1,014.2 million. Gross profit for 2013 was $351.7 million, or 29.9% of sales, compared to $305.2 million, or 30.1% of sales, in the full year 2012.

“I am pleased to report another record year of orders and sales at Chart, especially liquefied natural gas (“LNG”) revenue growth in both D&S and E&C, which increased by 89% over 2012,” stated Sam Thomas, Chart’s Chairman, President and Chief Executive Officer. “We have made significant inroads in the market and, combined with our capacity expansions and introduction of standard plants for small to mid-scale liquefaction, our positive long term outlook remains unchanged.”

Backlog at December 31, 2013 was $728.8 million, up 18% from the December 31, 2012 level of $617.4 million, and 2% lower than the backlog of $743.4 million at September 30, 2013. Orders for the fourth quarter of 2013 were $287.2 million, 22% lower than orders of $370.1 million booked in the third quarter of 2013. The third quarter of 2013 included three major LNG orders totaling in excess of $90 million.

“We continue to see increased end user demand for LNG as a replacement for diesel fuel in transportation and oilfield applications globally,” Thomas said. “While a majority of the transportation growth has been in Asia, we are seeing demand increase domestically as well, but at a somewhat slower pace than the market anticipated. While we are aware of the recent delays in the adoption of LNG in the over the road trucking industry, we feel customers are still committed to the long-term viability and benefits associated with LNG.”

Thomas continued, “We are confident that our growth initiatives, focus on quality, and commitment to meeting customer expectations will enable Chart to meet rising customer demand and uphold our status as a leading worldwide supplier to the energy and industrial gas markets. With this continued evidence of rising demand, I am pleased to announce that we have decided to expand our capacity in China for both LNG and industrial gas applications with an $80 million greenfield site near our current Changzhou, China facility. This investment will come in phases and allow us to meet the future demands of both markets.”

[mappress]
Press Release, February 25, 2014; Image: Chart