Chart Industries, Inc. is a global leader in the design, engineering, and manufacturing of process technologies and equipment for gas and liquid molecule handling. The company's unique product and solution portfolio serves the "Nexus of Clean" - clean power, clean water, clean food, and clean industrials, across a variety of end markets.
Company Overview
Established in 1992 and headquartered in Ball Ground, Georgia, Chart Industries has grown to become a diversified industrial conglomerate with a presence in over 60 global manufacturing locations and more than 50 service centers worldwide. The company's versatile offerings cater to the evolving needs of its customers, ranging from large multinational producers and distributors of hydrocarbon, hydrogen, and industrial gases to end-users in various industries.
Historical Background
Chart Industries' origins trace back to the 1960s when it was founded as a small welding supply company. Over the decades, the company gradually evolved and expanded its product offerings and geographical footprint through organic growth and strategic acquisitions. In the 1990s, Chart Industries made several key acquisitions to strengthen its cryogenic and heat transfer systems capabilities, including Hetsco in 1995 and Ryans Family Steakhouses in 1998. These deals allowed the company to broaden its end market reach and technological expertise. The early 2000s saw Chart Industries continue to grow, acquiring Caire Inc. and Ransome Gas Equipment to expand its industrial gas and energy infrastructure product lines.
During the 2008-2009 financial crisis, Chart Industries faced significant challenges as demand across its diverse end markets was impacted. The company responded by aggressively reducing costs and streamlining operations to weather the downturn. This focus on operational efficiency and managing through difficult market conditions would serve Chart well in the years to come.
In the 2010s, Chart Industries accelerated its global expansion, opening new manufacturing facilities in China, India, and other international markets to be closer to customers worldwide. The company also made several strategic acquisitions, including AL Air Liquide in 2014 and VRV S.p.A. in 2018, further enhancing its product portfolio and geographic presence. These investments positioned Chart Industries as a leading global provider of highly engineered equipment and solutions for the energy, industrial, and clean molecules end markets.
Business Segments
Chart's four reportable segments - Cryo Tank Solutions (CTS), Heat Transfer Systems (HTS), Specialty Products, and Repair, Service & Leasing (RSL) - demonstrate the breadth and depth of its capabilities. The CTS segment supplies bulk, microbulk, and mobile equipment for the storage, distribution, vaporization, and application of industrial gases and certain hydrocarbons. The HTS segment provides mission-critical engineered equipment and systems used in the recovery, separation, liquefaction, and purification of hydrocarbons, LNG, and industrial gases. The Specialty Products segment offers highly engineered solutions for specialty end-market applications, including hydrogen, helium, biofuels, carbon capture, and water treatment. Finally, the RSL segment provides installation, retrofitting, refurbishment, services, repairs, preventative and contractual maintenance, and digital solutions globally, in addition to targeted equipment leasing solutions.
ESG Commitment and Global Footprint
Throughout its history, Chart Industries has demonstrated a strong commitment to environmental, social, and governance (ESG) practices. The company's focus on the "Nexus of Clean" aligns with its dedication to sustainability and its customers' evolving needs. Chart's global manufacturing and service footprint, combined with its flexible and regionalized supply chain, have been instrumental in navigating various macroeconomic challenges, including supply chain disruptions and geopolitical tensions.
Financials
In the fourth quarter of 2024, Chart reported strong financial results, showcasing the resilience and adaptability of its business model. The company's orders reached $1.55 billion, a 29.4% increase compared to the prior-year period, driven by a large LNG order as well as robust demand across its other segments. Sales increased by 10.8% year-over-year, excluding the impact of foreign exchange, reaching $1.11 billion. Importantly, Chart's adjusted operating margin expanded to 22% in the fourth quarter, contributing to a full-year 2024 adjusted operating margin of 21.1%, a 400-basis-point improvement from the prior year.
The company's focus on operational excellence, cost synergies, and commercial initiatives has been instrumental in driving margin expansion. Additionally, Chart's diversified business model and strategic investments in high-growth end markets, such as hydrogen, carbon capture, and space exploration, have positioned the company well for continued success.
For the full year 2024, Chart reported impressive financial results across key metrics:
Revenue: $4.16 billion Net Income: $222.0 million Operating Cash Flow: $503.0 million Free Cash Flow: $388.0 million
The company's strong performance was driven by organic sales growth of 16.9% for the full year, showcasing the robust demand for Chart's products and solutions across its diverse end markets.
Chart's geographic diversification is evident in its sales distribution, with 60.1% of consolidated sales in 2024 coming from customers in foreign countries, while the United States accounted for 39.9% of consolidated sales.
The company maintains a solid financial position, with a debt-to-equity ratio of 1.21, cash and cash equivalents of $308.6 million, and $767.5 million available under its senior secured revolving credit facility due April 2029. Chart's current ratio stands at 1.38, and its quick ratio is 1.10, indicating strong short-term liquidity.
Future Outlook
Looking ahead, Chart expects to build on its momentum in 2025, guiding for full-year sales in the range of $4.6 billion to $4.9 billion and adjusted EBITDA between $1.05 billion and $1.15 billion. The company's strong backlog of $4.85 billion as of December 31, 2024, including the Woodside Louisiana LNG phase one order, provides good visibility into future revenue and earnings.
For 2025, Chart has reiterated its previous outlook, with revenue guidance ranging from $4.5 billion to $4.7 billion, adjusted EBITDA guidance of $1.075 billion to $1.125 billion, and free cash flow guidance of $550 million to $600 million. The company anticipates that its second half 2025 performance will sequentially increase compared to the first half, with Q1 2025 expected to be the lowest quarter of the year, which is typical for Chart's business cycle.
Challenges and Opportunities
Despite some near-term headwinds, such as foreign exchange impacts and inflation, Chart's management team has demonstrated its ability to navigate these challenges effectively. The company's focus on operational efficiency, commercial excellence, and strategic investments in high-growth end markets position Chart as a leader in the transition to a cleaner, more sustainable future.
Segment Performance
Chart's diverse business segments have contributed to its strong financial performance:
Cryo Tank Solutions (CTS): In 2024, CTS accounted for 15.3% of consolidated sales, generating $637.9 million in revenue. The segment's gross profit margin was 22.5%, and its operating margin was 11.7%. Despite a slight decrease in sales due to foreign currency fluctuations, CTS saw margin expansion in engineered tanks and general industrial products.
Heat Transfer Systems (HTS): This segment represented 24.9% of consolidated sales in 2024, with revenue of $1.04 billion. HTS achieved a gross profit margin of 28.9% and an operating margin of 22.5%. The segment benefited from increased sales in traditional energy and LNG applications.
Specialty Products: Accounting for 26.8% of consolidated sales in 2024, this segment generated $1.11 billion in revenue. With a gross profit margin of 27.0% and an operating margin of 15.5%, Specialty Products saw growth driven by the full-year impact of the Howden acquisition and strong demand in hydrogen, mining, space, carbon capture, and water treatment applications.
Repair, Service & Leasing (RSL): This segment contributed 33.0% of consolidated sales in 2024, with revenue of $1.37 billion. RSL achieved an impressive gross profit margin of 47.0% and an operating margin of 25.5%. The segment's growth was driven by the Howden acquisition and increased field service work.
Human Capital and ESG Commitment
Chart Industries recognizes the importance of its workforce in driving long-term success. As of January 31, 2025, the company employed 11,930 individuals, with 3,940 domestic and 7,990 international employees. Chart has one collective bargaining agreement covering 387 employees at its La Crosse, Wisconsin facility.
The company prioritizes several key areas in its human capital management:
Employee safety and wellness Talent acquisition and retention Employee engagement
Development and training Diversity and inclusion Compensation and pay equity
Chart has implemented various initiatives to support these priorities, including a Global Safety Council, tuition assistance programs, employee resource groups, and competitive compensation and benefits packages. The company's recordable incident rate of 1.2 is well below the industry average of 3.0, highlighting its commitment to employee safety.
In terms of diversity and inclusion, Chart has set a target of 30% women in leadership roles by 2027, with the current percentage standing at 28%. The company's employee engagement score of 85% is above industry benchmarks, while its voluntary turnover rate of 7% is below the industry average of 10%.
Chart's commitment to ESG principles extends beyond its workforce to its products and operations. The company reports annually on its ESG performance and focuses on sustainability and clean energy solutions. This aligns with Chart's position as a leader in providing technologies and equipment for the energy transition, including solutions for LNG, hydrogen, biogas, and carbon capture.
Regulatory Environment and Intellectual Property
Chart operates in a complex regulatory environment, subject to various federal, state, and local regulations related to environmental protection, health and safety, and the handling of hazardous materials. The company believes it is in substantial compliance with all known environmental regulations and does not anticipate any material capital expenditures related to regulatory compliance in 2025.
While Chart holds numerous patents, trademarks, and licenses, the company does not rely heavily on any single intellectual property right. Instead, Chart's competitive advantage stems from its technological capabilities, manufacturing quality control, and application of know-how.
Conclusion
In conclusion, Chart Industries' diversified product portfolio, global reach, and commitment to ESG principles make it a compelling investment opportunity in the industrial gas and process technology space. The company's strong financial performance, growing backlog, and promising outlook suggest that Chart is well-positioned to capitalize on the increasing demand for its innovative solutions across a wide range of industries. With its focus on operational excellence, human capital management, and strategic investments in high-growth markets, Chart Industries is poised for continued success in the evolving energy and industrial sectors.