Chart reports Q2 2018 results

Highlights:

• Orders of US$360.3 million, a 12% sequential increase over Q1 of 2018, and Chart’s sixth consecutive quarter of sequential growth. Orders increased 43% over Q2 of 2017, with 6% organic growth.
• Booked US$28 million order for Hudson Products (Energy & Chemicals) air cooled heat exchangers for a large LNG project.
• Sales of US$319.9 million, a sequential increase of 14% over Q1 of 2018, and 34% over Q2 of 2017, with 14% organic growth.
• Reported EPS of US$0.38 and adjusted EPS of US$0.55, reflecting margin leverage resulting from completed restructuring actions and continued order and sales strength.
• Increased full year revenue and EPS guidance range to US$1.20 billion to US$1.25 billion, and US$1.85 to US$2.05 per diluted share, respectively.

Net income for Q2 of 2018 was US$12.3 million or US$0.38 per diluted share. Q2 2018 earnings would have been US$0.55 per diluted share excluding US$1.4 million of transaction-related and restructuring costs, US$3.75 million of costs associated with the cryobiological aluminum tank recall, and US$1.4 million of net severance costs associated with the departure of the former Chief Executive Officer. This is a US$0.32 adjusted EPS increase over Q1 of 2018, and compares to net income for Q2 of 2017 of US$2.8 million, or US$0.09 per diluted share. Q2 2017 earnings would have been US$0.21 per diluted share excluding US$5.0 million of restructuring and US$1.0 million of transaction-related costs.

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Q2 of 2018 was Chart’s sixth consecutive quarter of sequential order growth, with 12% growth over Q1 of 2018, and sequential growth in orders in all of its three segments. Orders increased 43%, or US$107.7 million (US$15.5 million excluding Hudson Products) above Q2 of 2017. Included in the company’s Q2 2018 orders was a US$28 million order in its Energy & Chemicals (E&C) segment for a Hudson Products air cooled heat exchangers on a large LNG project; as well as a US$13 million order for equipment for a natural gas liquids fractionation project. A portion of these orders will ship in 2018 and the remainder are expected to ship in 2019. Additionally, Chart received a US$12 million order in Distribution & Storage (D&S) for liquid hydrogen storage vessels to be used in the private space industry for launch operations. Approximately 50% of this order will be recognized in 2018 revenue. Orders in the US, Europe and Asia increased sequentially and year over year, with Asian orders up 28% over Q1 of 2018 and 18% over Q2 of 2017. Strength in Asian orders was driven by packaged gas applications as well as respiratory and cryobiological product lines. LNG vehicle fueling demand continued to increase, and industrial CO2 activity is driving increased volumes of Bulk and MicroBulk product in the US for Chart’s D&S segment, while natural gas processing in its E&C segment continued to be strong (up 9.8% sequentially over Q1 of 2018 and up 47.2% from Q2 of 2017).

Sales of US$319.9 million for Q2 of 2018 increased 14% over Q1 of 2018. All three segments’ sales increased over Q1 of 2018 by at least 12%. Compared to Q2 of 2017, sales increased 34%, or 14% organically. The year-over-year increase in revenue was driven by E&C increases in demand for equipment for both natural gas processing and industrial gas applications, D&S packaged gas volume, LNG vehicle tanks, and increases in parts, repair, and aftermarket; as well as the release of the new portable oxygen concentrator in Chart’s BioMedical segment.

Gross profit for Q2 of 2018 was US$84.5 million, or 26.4% of sales, compared to Q1’s gross profit as a percent of sales of 27.6% of sales. The sequential decrease in gross margin as a percent of sales was driven by the US$3.75 million of costs associated with the cryobiological aluminum tank recall for a 12-week period earlier this year. Excluding the recall costs, gross margin as a percent of sales would have been sequentially higher than Q1 of 2018.

Selling, general, and administrative (SG&A) expenses for Q2 of 2018 were US$55.3 million, inclusive of US$0.8 million of transaction-related costs, US$0.6 million of restructuring costs, and net costs of US$1.4 million related to the departure of the previous CEO. SG&A expenses for Q1 of 2018 were US$54.1 million, inclusive of US$1.3 million of transaction-related costs, and US$0.6 million of restructuring costs.

“Our second quarter results reflect the past three quarters’ order strength. With the strength in packaged gas, order activity in Asia, and European LNG vehicle tank and trailer demand, combined with our right-sized cost structure, we expect to see the second half of 2018 at higher sales and earnings levels than the first half of the year,” said Jill Evanko, Chart’s President and CEO. “The US$28 million Hudson order received in Q2 for a large LNG project is exciting for our Energy & Chemicals segment, as it further demonstrates the strategic value of the combination of Hudson and Chart.”

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/20072018/chart-reports-q2-2018-results/