Chart Industries, Inc. (NASDAQ:GTLS), a leading diversified global
manufacturer of highly engineered equipment for the industrial gas,
energy and biomedical industries, today reported results for the
fourth quarter and year ended December 31, 2017. Highlights
include:
- Full year 2017 revenue of $988.8 million, an increase
of 15% from the prior year, and 5% organic growth
- Full year reported earnings per share (EPS) of $0.89
and adjusted EPS of $0.96 reflecting improved cost structure and
impact of the Tax Cuts and Jobs Act
- Full year order activity increased 18% (14% excluding
Hudson) over 2016, with sequential order growth in the fourth
quarter of 10%, and an increase in backlog to $461.3 million, up
35% from the prior year (15% excluding Hudson)
- Completed Skaff Cryogenics acquisition in January 2018,
which strategically builds our Distribution & Storage repair
and refurbishment platform
- 2018 guidance of 5-7% organic revenue growth and EPS
range of $1.65 to $1.90 inclusive of the beneficial impacts of our
recently completed restructuring actions and of the Tax Cuts and
Jobs Act
Net income for the fourth quarter of 2017 was
$26.7 million or $0.85 per diluted share. Fourth quarter 2017
earnings would have been $0.46 per diluted share excluding $4.3
million of restructuring and acquisition-related costs, $4.9
million related to debt extinguishment, $3.5 million related to
China litigation expense, and $22.5 million of benefit in the
quarter from the impact of U.S. tax reform. This compares
with a net loss of $3.3 million for the fourth quarter of 2016, or
($0.11) per diluted share. Fourth quarter 2016 adjusted
earnings were breakeven, excluding $4.7 million, or $0.11 of
restructuring related costs.
Net income for the year 2017 was $28.0 million,
or $0.89 per diluted share, compared to full year 2016 net income
of $28.2 million, or $0.91 per share. On an adjusted basis,
2017 earnings per share was $0.96, which excludes $0.57 from
restructuring and acquisition-related costs, $0.11 related to China
litigation expense, $0.10 of costs related to the refinancing of
our debt, and $0.71 of favorability from the impact of the Tax Cuts
and Jobs Act.
The U.S. tax reform benefit was primarily driven
by a one-time revaluation of deferred tax liabilities to the
reduced 21% federal tax rate in the United States, primarily from
Hudson Products, and partially offset by $4.5 million of transition
tax charges for the repatriation of foreign earnings. A full
reconciliation between GAAP and adjusted measures, as well as
additional information on the impact of tax reform and 2016
adjusted EPS is included as an exhibit herein.
Net sales for the fourth quarter of 2017 were
$306.0 million, a 43% increase compared to the fourth quarter 2016,
and 27% sequentially compared to the third quarter 2017. The
fourth quarter 2017 was the fifth consecutive quarter of sequential
organic growth for our Energy & Chemicals (“E&C”) segment,
and the third consecutive quarter for our D&S segment.
Strong order activity within all segments drove our organic
sales increase sequentially and for the full year.
The Hudson acquisition, which closed on
September 20, 2017, contributed $58.0 million in sales, $15.4
million of gross profit, and $6.4 million of operating income to
Chart for our period of ownership in 2017. On a full year
basis, which included the financial results prior to our completion
of the acquisition, Hudson performed as expected, with revenues of
$199.2 million.
Chart order activity in 2017 increased 18% over
2016, or 14% excluding Hudson. Each of the three segments had
order growth over 2016, with E&C 2017 orders totaling $243.6
million, or $212.3 million excluding orders from Hudson. This
compares to E&C’s 2016 orders of $110.2 million.
Increases in United States shale and associated gas drove natural
gas processing plant activity throughout 2017, resulting in the
best order year for E&C’s Air Cooled Heat Exchanger product
line since 2014.
Additionally, Chart’s order trends continued to
increase sequentially each quarter of 2017, including 10% growth
(1% organic) in the fourth quarter over the third quarter of
2017. Fourth quarter orders in the Distribution &
Storage (“D&S”) segment were $153.2 million, 14% higher than
the third quarter of 2017, and the highest order quarter since the
second quarter of 2016. The fourth quarter order strength in
D&S was driven primarily by mobile equipment, industrial gas
rail cars, and demand for beverage applications and packaged
gas.
Gross profit for the fourth quarter of 2017 was
$82.9 million, or 27.1% of sales and included $13.2 million from
Hudson. Gross profit for the full year of 2017 was $272.1
million, or 27.5% of sales, inclusive of $5.2 million of
restructuring costs. This compares to a full year gross
margin as a percent of sales in 2016 of 31.0%, which included an
unfavorable impact of $3.4 million from restructuring and other
charges, and included favorable impacts of $15.2 million from the
AirSep insurance settlement, and $38.7 million from several
short-lead time projects and contract expiration fees in our
E&C segment. With the restructuring actions complete as
of December 31, 2017, gross margin as a percent of sales is
expected to increase in 2018, with each of the three segments’
gross margins as a percent of sales expected to expand over
2017.
Selling, general and administrative (“SG&A”)
expenses for the fourth quarter of 2017 were $55.8 million,
inclusive of $1.1 million of acquisition-related costs, $3.2
million of restructuring costs, $3.4 million of China litigation
expense, and $5.1 million of SG&A for Hudson. The charges
related to the Chinese litigation were the result of a Chinese
court ruling over disputed commissions to a former external sales
representative.
SG&A for the full year 2017 was $215.1
million, inclusive of $10.1 million of acquisition-related costs,
$10.4 million of restructuring expenses, $3.4 million of China
litigation expense, and $5.7 million of Hudson SG&A.
SG&A for the full year of 2016 was $195.9 million, inclusive of
$6.9 million of restructuring and acquisition-related costs.
With the completion of these recent restructuring activities, we
expect full year 2018 SG&A dollars to decline as compared to
2017 on incremental volume.
“We are pleased with the 2017 results in the
business, in particular the completion of previously announced
restructuring activities that we expect to generate $15 million of
savings in 2018, the completion of three strategic acquisitions, a
successful refinance of our debt, and the order strength across all
three segments both on a full year and fourth quarter basis,”
stated Bill Johnson, Chart’s Chief Executive Officer and
President. “In addition, the acquisition of Skaff Cryogenics,
which closed on January 2, 2018, continues to build upon our strong
D&S installed base to build out a full solution for our
industrial gas customers. This acquisition contributes to our
global footprint of repair capabilities, which was enhanced in
August of 2017 by the acquisition of VCT Vogel in Germany.”
SEGMENT HIGHLIGHTS
Order activity for E&C in 2017 increased
over 2016 by 121% in total, and 93% excluding Hudson. The
main drivers of the increase in order activity in the E&C
segment were the growth in LifeCycle and natural gas and
petrochemical market strength. There were no significant
orders for LNG liquefaction plants in 2017, although in the fourth
quarter of 2017, Tellurian announced an agreement with Bechtel and
Chart to proceed with utilizing Chart’s IPSMR® process technology
and equipment on the Driftwood project. In the fourth
quarter, E&C sales were $99.2 million, or $47.3 million
excluding Hudson. The sequential increase from the third
quarter of 2017 in E&C revenue was 17% (excluding Hudson),
making the fourth quarter the highest sales quarter since the
second quarter of 2016 which included several short lead-time
projects and contract expiration fees. E&C gross margin
as a percent of sales continues to improve sequentially, with the
fourth quarter 2017 at 22.9%, bringing the full year E&C gross
margin as a percent of sales to 20.0%.
D&S sales increased $43.2 million to $540.3
million for the full year 2017 compared to 2016. Sequentially
compared to the third quarter 2017, sales increased $10.9 million
to $150.2 million in the fourth quarter 2017, making it the highest
sales quarter for D&S since the fourth quarter of 2014.
Strength in demand for mobile units for water, industrial gas,
nitrogen and oxygen, combined with packaged gas increases in the
Americas contributed to this quarter’s sales levels. D&S
China sales were $95 million for the year, compared to $83 million
in 2016, reflecting modest recovery in the region, albeit below
peak levels of $152.9 million in 2014. D&S gross margin
as a percent of sales for the full year 2017 was 27.1%, compared to
26.2% in 2016, inclusive of $0.5 million and $2.3 million of
restructuring charges, respectively.
Fourth quarter 2017 BioMedical sales of $56.6
million increased 3.5% from the third quarter 2017 sales of $54.7
million, driven primarily by the strength in Cryobiological
stainless steel tanks, and on-site gas generation growth.
Full year 2017 BioMedical sales grew 7.3% over 2016, with all
product categories (Respiratory, Cryobiological and On-site gas
generation) growing 5% or more year over year. BioMedical
gross margin as a percent of sales for 2017 was 36.2%, inclusive of
$2.6 million of restructuring charges primarily related to the
Buffalo, NY respiratory facility consolidation. Full year
2016 gross margin as a percent of sales was 43.9%, inclusive of
$15.2 million of favorability from the AirSep insurance settlement,
offset partially by $1.4 million of restructuring charges.
SG&A for the full year 2017 for BioMedical was $42.1 million,
inclusive of $2.5 million of restructuring charges. This
compares to $45.7 million of SG&A in 2016, including $0.6
million of restructuring costs. The reduction in
year-over-year normalized SG&A was driven by the facility
consolidation completed in the first quarter of 2017 and the
reduction in force completed in the third quarter of 2017.
OUTLOOK
The following guidance includes the acquisition
of Skaff Cryogenics, which was completed on January 2, 2018, as
well as the anticipated impact from tax reform and the execution of
our tax planning strategy. Additionally, guidance includes
the anticipated impact from the revenue recognition accounting
standard change, effective January 1, 2018. Sales guidance is
expected to be in the range of $1.15 billion to $1.20 billion for
the full year of 2018. We expect full year adjusted earnings
per diluted share (non-GAAP) to be in the range of $1.65 to $1.90
per share, on approximately 31.5 million weighted average shares
outstanding. This excludes any restructuring costs and
acquisition-related costs, and as such is a non-GAAP measure.
This includes approximately $0.15 of anticipated benefit from the
Tax Cuts and Jobs Act, moving our normalized effective tax rate
from approximately 34% to 27%-29%. We expect our capital
expenditures for 2018 will be in the range of $35 million to $45
million, inclusive of all recently completed acquisitions’ capital
requirements.
FORWARD-LOOKING STATEMENTS
Certain statements made in this news release are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include statements concerning the Company's plans,
objectives, future orders, revenues, margins, tax rates and tax
planning, earnings or performance, liquidity and cash flow, capital
expenditures, business trends, and other information that is not
historical in nature. Forward-looking statements may be
identified by terminology such as “may,” “will,” “should,” “could,”
“expects,” “anticipates,” “believes,” “projects,” “forecasts,”
“outlook,” “guidance,” “continue,” or the negative of such terms or
comparable terminology.
Forward-looking statements contained in this
news release or in other statements made by the Company are made
based on management's expectations and beliefs concerning future
events impacting the Company and are subject to uncertainties and
factors relating to the Company's operations and business
environment, all of which are difficult to predict and many of
which are beyond the Company's control, that could cause the
Company's actual results to differ materially from those matters
expressed or implied by forward-looking statements. Factors
that could cause the Company’s actual results to differ materially
from those described in the forward-looking statements include
those found in Item 1A (Risk Factors) in the Company’s most recent
Annual Report on Form 10-K filed with the SEC, which should be
reviewed carefully, as well as risks and uncertainties related to
the integration of the Hudson, VCT Vogel and Skaff Cryogenics
businesses with the Company’s, as well as the implementation and
realization of benefits under the Tax Cuts and Jobs Act. The
Company undertakes no obligation to update or revise any
forward-looking statement.
Chart is a leading diversified global
manufacturer of highly engineered equipment for the industrial gas,
energy, and biomedical industries. The majority of Chart's
products are used throughout the liquid gas supply chain for
purification, liquefaction, distribution, storage and end-use
applications, a large portion of which are energy-related.
Chart has domestic operations located across the United States and
an international presence in Asia, Australia, Europe and Latin
America. For more information, visit:
http://www.chartindustries.com.
USE OF NON-GAAP FINANCIAL INFORMATION
To supplement the unaudited condensed
consolidated financial statements presented in accordance with U.S.
GAAP in this news release, certain non-GAAP financial measures as
defined by the SEC rules are used. The Company believes these
non-GAAP measures are of interest to investors and facilitate
useful period-to-period comparisons of the Company’s financial
results, and this information is used by the Company in evaluating
internal performance. See the last page of this news release
for a reconciliation of adjusted earnings per diluted share, a
non-GAAP measure included in this release.
With respect to the Company's full year earnings
outlook, the Company is not able to provide a reconciliation of the
adjusted earnings per diluted share because certain items may have
not yet occurred or are out of the Company's control and / or
cannot be reasonably predicted.
CONFERENCE CALL
As previously announced, the Company will
discuss its fourth quarter, full year 2017 financial results and
outlook for 2018 on a conference call on Thursday, February 22,
2018 at 9:30 a.m. ET. Participants may join the conference
call by dialing (877) 312-9395 in the U.S. or (970) 315-0456 from
outside the U.S. Please log-in or dial-in at least five
minutes prior to the start time.
A taped replay of the conference call will be
archived on the Company’s website, www.chartindustries.com,
approximately one hour after the call concludes. You may also
listen to a recorded replay of the conference call by dialing (855)
859-2056 in the U.S. or (404) 537-3406 outside the U.S. and
entering Conference ID 5965128. The telephone replay will be
available beginning 1:30 p.m. ET, Thursday, February 22, 2018 until
1:30 p.m. ET, Thursday, March 1, 2018.
For more information, click here:
http://ir.chartindustries.com/
See URL below for a link to our Supplemental
Information for our 2017 Fourth Quarter and Annual
Results:http://resource.globenewswire.com/Resource/Download/07964156-6faa-473c-875a-23bfb0cfba0b
Contact:
Jillian Evanko |
Chief Financial
Officer |
770-721-7739 |
jillian.evanko@chartindustries.com |
CHART INDUSTRIES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)(Dollars and shares in
millions, except per share amounts)
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Sales (1) |
$ |
306.0 |
|
|
$ |
214.4 |
|
|
$ |
988.8 |
|
|
$ |
859.2 |
|
Cost of sales |
223.1 |
|
|
157.3 |
|
|
716.7 |
|
|
592.8 |
|
Gross profit |
82.9 |
|
|
57.1 |
|
|
272.1 |
|
|
266.4 |
|
Selling, general, and
administrative expenses (2) |
55.8 |
|
|
52.1 |
|
|
215.1 |
|
|
195.9 |
|
Amortization
expense |
5.7 |
|
|
2.7 |
|
|
15.0 |
|
|
11.9 |
|
Asset impairments |
— |
|
|
— |
|
|
— |
|
|
1.2 |
|
Operating
expenses |
61.5 |
|
|
54.8 |
|
|
230.1 |
|
|
209.0 |
|
Operating income (1)
(2) (3) (4) |
21.3 |
|
|
2.3 |
|
|
42.0 |
|
|
57.4 |
|
Other expenses: |
|
|
|
|
|
|
|
Interest
expense, net |
6.4 |
|
|
4.8 |
|
|
19.4 |
|
|
17.3 |
|
Loss on
extinguishment of debt (5) |
4.9 |
|
|
— |
|
|
4.9 |
|
|
— |
|
Financing
costs amortization |
0.3 |
|
|
0.3 |
|
|
1.3 |
|
|
1.3 |
|
Foreign
currency loss |
1.0 |
|
|
0.2 |
|
|
2.8 |
|
|
0.4 |
|
Other
expenses, net |
12.6 |
|
|
5.3 |
|
|
28.4 |
|
|
19.0 |
|
Income (loss) before
income taxes |
8.7 |
|
|
(3.0 |
) |
|
13.6 |
|
|
38.4 |
|
Income tax (benefit)
expense (6) |
(18.3 |
) |
|
0.9 |
|
|
(15.9 |
) |
|
13.7 |
|
Net income (loss) |
27.0 |
|
|
(3.9 |
) |
|
29.5 |
|
|
24.7 |
|
Less: Income (loss)
attributable to noncontrolling interests, net of taxes |
0.3 |
|
|
(0.6 |
) |
|
1.5 |
|
|
(3.5 |
) |
Net income (loss)
attributable to Chart Industries, Inc. |
$ |
26.7 |
|
|
$ |
(3.3 |
) |
|
$ |
28.0 |
|
|
$ |
28.2 |
|
Net income (loss)
attributable to Chart Industries, Inc. per common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.87 |
|
|
$ |
(0.11 |
) |
|
$ |
0.91 |
|
|
$ |
0.92 |
|
Diluted |
$ |
0.85 |
|
|
$ |
(0.11 |
) |
|
$ |
0.89 |
|
|
$ |
0.91 |
|
Weighted average number
of common shares outstanding: |
|
|
|
|
|
|
|
Basic |
30.78 |
|
|
30.60 |
|
|
30.74 |
|
|
30.58 |
|
Diluted |
31.51 |
|
|
30.60 |
|
|
31.34 |
|
|
30.99 |
|
_______________
(1) Includes Hudson net sales and
operating income of $51.9 and $5.2 for the three months ended
December 31, 2017, and $58.0 and $6.4 for the year ended December
31, 2017, respectively.
(2) Includes acquisition-related
expenses of $1.1 for the three months ended December 31, 2017, and
$10.1 for the year ended December 31, 2017.
(3) Includes depreciation expense of
$7.5 and $6.2 for the three months ended December 31, 2017 and
2016, respectively, and $26.9 and $25.6 for the year ended December
31, 2017 and 2016, respectively.
(4) Includes restructuring costs of $3.2
and $4.7 for the three months ended December 31, 2017 and 2016,
respectively, and $15.6 and $10.9 for the year ended December 31,
2017 and 2016, respectively.
(5) During the three and twelve
months ended December 31, 2017, we recorded a $4.9 loss on
extinguishment of debt associated with the repurchase of $192.9
principal amount of our $250.0 2.00% convertible notes due August
2018 and refinance of our senior secured revolving credit
facility.
(6) Includes a one-time $22.5 net
favorable tax benefit that was recorded during the fourth quarter
of 2017, which resulted from the enactment of the Tax Cuts and Jobs
Act. This benefit mainly consisted of a one-time, provisional
benefit of $26.9 related to the remeasurement of certain of our
deferred tax liabilities using the lower U.S. federal corporate tax
rate of 21%. This was partially offset by (i) a one-time,
provisional charge of $8.7 related to the deemed repatriation
transition tax, which is a tax on previously untaxed accumulated
earnings and profits of certain of our foreign subsidiaries, and
(ii) a one-time tax expense and tax benefit of $4.5 and $8.7,
respectively, related to our intent to amend pre-acquisition Hudson
U.S. federal tax returns.
CHART INDUSTRIES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)(Dollars in
millions)
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net Cash
Provided By Operating Activities |
$ |
28.5 |
|
|
$ |
24.2 |
|
|
$ |
47.0 |
|
|
$ |
170.8 |
|
Investing
Activities |
|
|
|
|
|
|
|
Acquisition of businesses, net of cash acquired |
— |
|
|
— |
|
|
(446.1 |
) |
|
(1.4 |
) |
Capital
expenditures |
(11.9 |
) |
|
(4.3 |
) |
|
(35.2 |
) |
|
(17.8 |
) |
Government grants |
— |
|
|
— |
|
|
0.4 |
|
|
1.1 |
|
Proceeds
from sale of assets |
— |
|
|
— |
|
|
0.9 |
|
|
— |
|
Net Cash Used
In Investing Activities |
(11.9 |
) |
|
(4.3 |
) |
|
(480.0 |
) |
|
(18.1 |
) |
Financing
Activities |
|
|
|
|
|
|
|
Borrowings on revolving credit facilities |
— |
|
|
— |
|
|
302.2 |
|
|
3.8 |
|
Repayments on revolving credit facilities |
(61.0 |
) |
|
— |
|
|
(66.1 |
) |
|
(6.1 |
) |
Repurchase of convertible notes |
(194.9 |
) |
|
— |
|
|
(194.9 |
) |
|
— |
|
Proceeds
from issuance of convertible notes |
258.8 |
|
|
— |
|
|
258.8 |
|
|
— |
|
Proceeds
from issuance of warrants |
46.0 |
|
|
— |
|
|
46.0 |
|
|
— |
|
Payments
for call options related to convertible notes |
(59.5 |
) |
|
— |
|
|
(59.5 |
) |
|
— |
|
Borrowings on term loan |
— |
|
|
— |
|
|
— |
|
|
13.2 |
|
Repayments on term loan |
(3.1 |
) |
|
(1.4 |
) |
|
(3.1 |
) |
|
(2.9 |
) |
Payments
for debt issuance costs |
(8.2 |
) |
|
— |
|
|
(8.2 |
) |
|
— |
|
Proceeds
from exercise of stock options |
0.9 |
|
|
0.3 |
|
|
2.0 |
|
|
0.4 |
|
Common
stock repurchases |
— |
|
|
— |
|
|
(2.0 |
) |
|
(0.7 |
) |
Net Cash (Used
In) Provided By Financing Activities |
(21.0 |
) |
|
(1.1 |
) |
|
275.2 |
|
|
7.7 |
|
Effect of exchange rate
changes on cash and cash equivalents |
2.3 |
|
|
(4.1 |
) |
|
7.2 |
|
|
(2.1 |
) |
Net (decrease) increase
in cash, cash equivalents, restricted cash, and restricted cash
equivalents |
(2.1 |
) |
|
14.7 |
|
|
(150.6 |
) |
|
158.3 |
|
Cash, cash equivalents,
restricted cash, and restricted cash equivalents at beginning of
period |
133.4 |
|
|
267.3 |
|
|
282.0 |
|
|
123.7 |
|
CASH, CASH
EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT
END OF PERIOD |
$ |
131.4 |
|
|
$ |
282.0 |
|
|
$ |
131.4 |
|
|
$ |
282.0 |
|
CHART INDUSTRIES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(Dollars in millions)
|
December 31, 2017 |
|
December 31, 2016 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Cash and cash
equivalents |
$ |
122.6 |
|
|
$ |
282.0 |
|
Accounts receivable,
net |
222.7 |
|
|
142.8 |
|
Inventories, net |
208.9 |
|
|
169.7 |
|
Other current
assets |
79.8 |
|
|
58.5 |
|
Property, plant, and
equipment, net |
297.6 |
|
|
251.0 |
|
Goodwill |
468.8 |
|
|
218.0 |
|
Identifiable intangible
assets, net |
302.5 |
|
|
93.4 |
|
Other assets |
21.8 |
|
|
17.6 |
|
TOTAL
ASSETS |
$ |
1,724.7 |
|
|
$ |
1,233.0 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Current
liabilities |
$ |
387.6 |
|
|
$ |
261.5 |
|
Long-term debt |
439.2 |
|
|
233.7 |
|
Other long-term
liabilities |
92.7 |
|
|
39.2 |
|
Equity |
805.2 |
|
|
698.6 |
|
TOTAL
LIABILITIES AND EQUITY |
$ |
1,724.7 |
|
|
$ |
1,233.0 |
|
CHART INDUSTRIES, INC. AND
SUBSIDIARIESOPERATING SEGMENTS
(UNAUDITED)(Dollars in millions)
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Sales |
|
|
|
|
|
|
|
Energy &
Chemicals (1) |
$ |
99.2 |
|
|
$ |
31.4 |
|
|
$ |
225.6 |
|
|
$ |
154.3 |
|
Distribution &
Storage |
150.2 |
|
|
133.4 |
|
|
540.3 |
|
|
497.1 |
|
BioMedical |
56.6 |
|
|
49.6 |
|
|
222.9 |
|
|
207.8 |
|
Total |
$ |
306.0 |
|
|
$ |
214.4 |
|
|
$ |
988.8 |
|
|
$ |
859.2 |
|
Gross
Profit |
|
|
|
|
|
|
|
Energy &
Chemicals |
$ |
22.7 |
|
|
$ |
5.8 |
|
|
$ |
45.1 |
|
|
$ |
44.9 |
|
Distribution &
Storage |
39.9 |
|
|
34.2 |
|
|
146.3 |
|
|
130.3 |
|
Biomedical (2) |
20.3 |
|
|
17.1 |
|
|
80.7 |
|
|
91.2 |
|
Total |
$ |
82.9 |
|
|
$ |
57.1 |
|
|
$ |
272.1 |
|
|
$ |
266.4 |
|
Gross Profit
Margin |
|
|
|
|
|
|
|
Energy &
Chemicals |
22.9 |
% |
|
18.3 |
% |
|
20.0 |
% |
|
29.1 |
% |
Distribution &
Storage |
26.6 |
% |
|
25.7 |
% |
|
27.1 |
% |
|
26.2 |
% |
BioMedical |
35.9 |
% |
|
34.5 |
% |
|
36.2 |
% |
|
43.9 |
% |
Total |
27.1 |
% |
|
26.6 |
% |
|
27.5 |
% |
|
31.0 |
% |
Operating
Income (Loss) (2) (3) (4) |
|
|
|
|
|
|
|
Energy &
Chemicals (1) |
$ |
7.5 |
|
|
$ |
(0.9 |
) |
|
$ |
5.1 |
|
|
$ |
13.3 |
|
Distribution &
Storage (5) |
16.8 |
|
|
12.9 |
|
|
66.1 |
|
|
50.4 |
|
BioMedical |
11.2 |
|
|
3.8 |
|
|
35.5 |
|
|
42.0 |
|
Corporate (6) |
(14.2 |
) |
|
(13.5 |
) |
|
(64.7 |
) |
|
(48.3 |
) |
Total |
$ |
21.3 |
|
|
$ |
2.3 |
|
|
$ |
42.0 |
|
|
$ |
57.4 |
|
Operating
Margin (Loss) |
|
|
|
|
|
|
|
Energy &
Chemicals |
7.6 |
% |
|
(2.9 |
)% |
|
2.3 |
% |
|
8.6 |
% |
Distribution &
Storage |
11.2 |
% |
|
9.7 |
% |
|
12.2 |
% |
|
10.1 |
% |
BioMedical |
19.8 |
% |
|
7.7 |
% |
|
15.9 |
% |
|
20.2 |
% |
Total |
7.0 |
% |
|
1.1 |
% |
|
4.2 |
% |
|
6.7 |
% |
_______________
(1) Hudson, included in the E&C
segment results since the acquisition date, September 20, 2017,
added net sales and operating income of $58.0 and $6.4 for the year
ended December 31, 2017, including $51.9 and $5.2 in the fourth
quarter, respectively.
(2) During the third quarter of 2016,
we recovered for breaches of representations and warranties
primarily related to warranty costs for certain product lines
acquired in the 2012 acquisition of AirSep Corporation under the
related representation and warranty insurance. For the year
ended December 31, 2016, this reduced BioMedical cost of sales by
$15.2 and reduced Corporate SG&A expenses by $0.3, net of
associated legal fees recorded in 2016.
(3) Restructuring costs for year
ended December 31, 2017 were $15.6 ($2.4 – E&C, $2.2 – D&S,
$5.0 BioMedical, and $6.0 – Corporate). Restructuring costs
for year ended December 31, 2016 were $10.9 ($1.0 – E&C, $3.8 –
D&S, $1.9 – BioMedical, and $4.2 – Corporate).
(4) Includes asset impairment charges of
$1.2 attributed to D&S for the year ended December 31,
2017.
(5) Over the prior five years,
we were involved in litigation in China with a former external
sales representative over disputed commissions. In years
prior to 2017, we accrued $4.6 as our best estimate of the related
contingent liability. Based on a China court ruling received
in February 2018, the claimant was awarded $8.3. As a result
of this ruling, we accrued an additional $3.7 in the fourth quarter
of 2017. The one-time EPS impact from this ruling was $0.11
for both the quarter and year ended December 31, 2017. This
is reflected in our D&S segment operating results.
(6) Includes
acquisition-related expenses of $1.1 for the three months ended
December 31, 2017, and $10.1 for the year ended December 31,
2017.
CHART INDUSTRIES, INC. AND
SUBSIDIARIESORDERS AND BACKLOG
(UNAUDITED)(Dollars in millions)
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, 2017 |
|
September 30, 2017 |
|
December 31, 2017 |
|
December 31, 2016 |
Orders |
|
|
|
|
|
|
|
Energy &
Chemicals (1) |
$ |
75.1 |
|
|
$ |
65.9 |
|
|
$ |
243.6 |
|
|
$ |
110.2 |
|
Distribution &
Storage |
153.2 |
|
|
134.2 |
|
|
541.5 |
|
|
531.0 |
|
BioMedical |
55.9 |
|
|
57.9 |
|
|
219.4 |
|
|
213.6 |
|
Total |
$ |
284.2 |
|
|
$ |
258.0 |
|
|
$ |
1,004.5 |
|
|
$ |
854.8 |
|
|
As of |
|
December 31, 2017 |
|
September 30, 2017 |
|
December 31, 2016 |
Backlog |
|
|
|
|
|
Energy &
Chemicals (2) |
$ |
210.9 |
|
|
$ |
234.6 |
|
|
$ |
99.8 |
|
Distribution &
Storage |
227.5 |
|
|
222.9 |
|
|
218.2 |
|
BioMedical |
22.9 |
|
|
23.2 |
|
|
24.6 |
|
Total |
$ |
461.3 |
|
|
$ |
480.7 |
|
|
$ |
342.6 |
|
_______________
(1) E&C orders includes $27.5 and
$31.3 in orders related to Hudson for the three and twelve months
ended December 31, 2017, respectively.
(2) E&C backlog as of December 31, 2017
includes $65.8 related to Hudson and approximately $40 related to
the previously announced Magnolia LNG order.
CHART INDUSTRIES, INC. AND
SUBSIDIARIESRECONCILIATION OF EARNINGS (LOSS) PER
DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE
(UNAUDITED)(Dollars in millions, except per share
amounts)
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 (1) |
Earnings (loss) per
diluted share (U.S. GAAP) |
$ |
0.85 |
|
|
$ |
(0.11 |
) |
|
$ |
0.89 |
|
|
$ |
0.91 |
|
Transition tax (2) |
(0.71 |
) |
|
— |
|
|
(0.71 |
) |
|
— |
|
Restructuring and
acquisition-related costs |
0.11 |
|
|
0.11 |
|
|
0.57 |
|
|
0.24 |
|
China litigation award
(3) |
0.11 |
|
|
— |
|
|
0.11 |
|
|
— |
|
Loss on extinguishment
of debt (4) |
0.10 |
|
|
— |
|
|
0.10 |
|
|
— |
|
Asset impairments |
— |
|
|
— |
|
|
— |
|
|
0.04 |
|
Q1 2016 flood insurance
settlement |
— |
|
|
— |
|
|
— |
|
|
(0.02 |
) |
Adjusted
earnings per diluted share (non-GAAP) |
$ |
0.46 |
|
|
$ |
— |
|
|
$ |
0.96 |
|
|
$ |
1.17 |
|
_______________
(1) During the third quarter of 2016, we
recovered for breaches of representations and warranties primarily
related to warranty costs for certain product lines acquired in the
2012 acquisition of AirSep Corporation under the related
representation and warranty insurance. For the year ended
December 31, 2016, this award reduced our BioMedical segment’s cost
of sales by $15.2 and Corporate SG&A by $0.8, representing
$0.52 per share. We incurred higher than expected warranty
costs in the BioMedical segment since the AirSep acquisition in
2012 and as a result, have not adjusted this out for internal
purposes as increased expenses were reflected in our operating
results in prior periods.
(2) Includes a one-time $22.5 net favorable
tax benefit that was recorded during the fourth quarter of 2017,
which resulted from the enactment of the Tax Cuts and Jobs
Act. This benefit mainly consisted of a one-time, provisional
benefit of $26.9 related to the remeasurement of certain of our
deferred tax liabilities using the lower U.S. federal corporate tax
rate of 21%. This was partially offset by (i) a one-time,
provisional charge of $8.7 million related to the deemed
repatriation transition tax, which is a tax on previously untaxed
accumulated earnings and profits of certain of our foreign
subsidiaries, and (ii) a one-time tax expense and tax benefit of
$4.5 million and $8.7 million, respectively, related to our intent
to amend pre-acquisition Hudson U.S. federal tax returns.
(3) Over the prior five years, we were
involved in litigation in China with a former external sales
representative over disputed commissions. In years prior to
2017, we accrued $4.6 as our best estimate of the related
contingent liability. Based on a China court ruling received
in February 2018, the claimant was awarded $8.3. As a result
of this ruling, we accrued an additional $3.7 in the fourth quarter
of 2017. The one-time EPS impact from this ruling was $0.11
for both the quarter and year ended December 31, 2017. This
is reflected in our D&S segment operating results.
(4) During the three and twelve months
ended December 31, 2017, we recorded a $4.9 loss on extinguishment
of debt associated with the repurchase of $192.9 principal amount
of our $250.0 2.00% convertible notes due August 2018 and refinance
of our senior secured revolving credit facility.
Adjusted earnings per diluted share is not a
measure of financial performance under U.S. generally accepted
accounting principles (“GAAP”) and should not be considered as an
alternative to earnings per share in accordance with U.S.
GAAP. Management believes that adjusted earnings per share
facilitates useful period-to-period comparisons of the Company’s
financial results and this information is used by the Company in
evaluating internal performance. Chart’s calculation of this
non-GAAP measure may not be comparable to the calculations of
similarly titled measures reported by other companies.
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