Chart Industries (GTLS) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales reached $1.06 billion, up 22.4% year-over-year, with all segments showing sales growth and margin improvement; orders were $1.17 billion, up 5.4%.

• Adjusted EBITDA was $260.7 million (24.5% margin), up 39.3% year-over-year; adjusted EPS was $2.18, impacted by FX and tax rate changes.

• Free cash flow for Q3 was $174.6 million, supporting net leverage reduction to 3.04x.

• Backlog reached $4.54 billion, up 9.5% year-over-year, driven by strong order activity in Heat Transfer Systems and Repair, Service & Leasing.

• Notable commercial wins included major LNG, hydrogen, and energy projects, with cost synergies from the Howden acquisition exceeding $250 million.

Financial highlights

• Reported gross margin increased 350 bps to 34.1%; adjusted operating margin was 22.2%.

• Reported operating income was $178.5 million (16.8% margin); adjusted operating income was $235.9 million (22.2% margin), up 53% year-over-year.

• Adjusted diluted EPS was $2.18, up from $1.02 in Q3 2023.

• Net cash from operations was $200.7 million; capital expenditures were $26.1 million.

• Book-to-bill ratio was 1.10, and backlog increased to $4.54 billion.

Outlook and guidance

• 2024 sales outlook: $4.2–$4.3 billion; adjusted EBITDA: $1.015–$1.045 billion; adjusted EPS: ~$9.00; free cash flow: ~$400 million.

• 2025 sales expected at $4.65–$4.85 billion; adjusted EBITDA: $1.175–$1.225 billion; adjusted EPS: $12–$13; free cash flow: $550–$600 million.

• 2025 outlook incorporates backlog coverage (61% of backlog to convert in 12 months) and learnings from project-based revenue timing.

• Net leverage ratio target remains 2.0–2.5x by end of 2025.

• Management expects to meet ongoing cash requirements with operating cash flow, existing balances, and available credit.