Chart Industries (GTLS) Q2 2024 earnings summary

Executive summary

• Achieved all-time record sales, backlog, gross profit, gross margin, operating income, EBITDA, and associated adjusted metrics for Q2 2024, reflecting the full impact of the Howden acquisition.

• Orders reached $1.16 billion, up 12.1% year-over-year and approximately 40% excluding Big LNG; commercial pipeline for potential orders in the next three years increased to ~$23 billion.

• Every segment and region posted year-over-year sales growth, with record sales in RSL (aftermarket) and specialty products; backlog reached $4.43 billion as of June 30, 2024.

• Commercial and cost synergies from the Howden integration are ahead of schedule, with $924 million in commercial synergies and $223 million in cost synergies achieved.

• Strong demand across data centers, hydrogen, LNG, CCUS, and other specialty markets, with a robust and diversified order pipeline.

Financial highlights

• Q2 2024 sales reached $1,040.3 million, up 18.8% year-over-year; gross profit margin was a record 33.8%, up 310 bps.

• Reported operating income was $167.8 million (16.1% of sales); adjusted operating income $225.7 million (21.7% margin), up 53.1% year-over-year.

• Adjusted EBITDA was $257.3 million (24.7% margin), up 37.2% year-over-year; reported EBITDA was $229.6 million (22.1% margin).

• Adjusted diluted EPS was $2.18 (includes $0.14 negative impact from mandatory preferred dividend and $0.04 FX headwind); reported diluted EPS $1.10.

• Free cash flow for Q2 was $88.0 million, below prior outlook due to timing of customer payments and project milestones; net cash from operations was $116.1 million.

• Net leverage ratio reduced to 3.26 from 4.08 over five quarters.

Outlook and guidance

• Full-year 2024 sales guidance: $4.45–$4.6 billion, including ~1% FX headwind; adjusted EBITDA: $1.08–$1.15 billion; adjusted EPS: $10.75–$11.75; free cash flow: $400–$475 million.

• Effective tax rate expected at 20–21%; diluted share count ~47 million.

• Medium-term targets (through 2026): mid-teens organic revenue CAGR, mid-30% gross margin, mid-40% adjusted EPS CAGR, FCF conversion 95–100%, ROIC mid-teens%.

• Sequential sales and margin growth expected in 2025 and 2026; medium-term outlook excludes $1.5 billion in potential Big LNG projects and future U.S. hydrogen hub benefits.