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 in Q2 2024, reflecting the full impact of the Howden acquisition.

• Orders reached $1.16 billion, up 12.1% year-over-year and up 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 and Specialty Products.

• 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.

• Backlog reached a record $4.43 billion as of June 30, 2024, up from $3.96 billion year-over-year.

Financial highlights

• Q2 2024 sales were $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 margin was 21.7%.

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

• Adjusted diluted EPS was $2.18, including a $0.14 negative impact from the mandatory preferred dividend and $0.04 from FX.

• Free cash flow was $88.0 million; net cash from operating activities was $116.1 million; net leverage ratio improved to 3.26.

Outlook and guidance

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

• Medium-term targets: mid-teens organic revenue CAGR, mid-30% gross margin, mid-40% adjusted EPS CAGR, FCF conversion 95–100%, ROIC mid-teens, and net leverage ratio of 2–2.5.

• Sequential double-digit 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.