• Net Cash from Operating Activities: $281.5 million in Q4 2024.
• Free Cash Flow: $261 million in Q4 2024; $388 million for full year 2024.
• Net Leverage Ratio: 2.8x at year-end 2024.
• Orders: $1.55 billion in Q4 2024, a 29.4% increase from Q4 2023; $5 billion for full year 2024, a 13% increase from 2023.
• Sales: $1.11 billion in Q4 2024, a 10.8% increase excluding FX; $4.16 billion for full year 2024, a 17.5% organic increase.
• Adjusted Operating Income: $243.4 million in Q4 2024, with a 22% margin.
• Gross Margin: 33.6% in Q4 2024.
• Adjusted EBITDA: $283.6 million in Q4 2024, 25.6% of sales; $1.014 billion for full year 2024, 24.4% of sales.
• Adjusted Diluted EPS: $2.66 in Q4 2024.
• CapEx: $20.5 million in Q4 2024; expected to be approximately $110 million for 2025.
• Net Working Capital: Improved to 13.4% of trailing 12-month sales.
• Segment Performance: Record orders and sales in Heat Transfer Systems and Specialty Products in Q4 2024.
• Repair, Service, and Leasing (RSL) Orders: $369 million in Q4 2024, a 14.2% increase from Q4 2023.
• Commercial Pipeline: Approximately $24 billion in opportunities not yet in backlog.

• Warning! GuruFocus has detected 5 Warning Signs with GTLS.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Chart Industries Inc (NYSE:GTLS) reported a significant increase in orders, with a 29.4% rise in the fourth quarter of 2024 compared to the same period in 2023.
• The company achieved a record full-year adjusted EBITDA of $1.014 billion, representing a 24.4% margin and a year-over-year increase of 330 basis points.
• Chart Industries Inc (NYSE:GTLS) successfully reduced its net leverage ratio to 2.8x by the end of 2024, making progress towards its target range of 2x to 2.5x.
• The company reported strong performance in its Heat Transfer Systems segment, with record orders and sales driven by LNG projects.
• Chart Industries Inc (NYSE:GTLS) has a robust commercial pipeline with approximately $24 billion in opportunities not yet in backlog, indicating strong future growth potential.

Negative Points

• The company faced a $17 million headwind from foreign exchange in the fourth quarter of 2024, impacting sales.
• Fourth-quarter 2024 adjusted diluted earnings per share of $2.66 were negatively affected by foreign exchange, tax rate changes, share count fluctuations, and interest expenses, resulting in a $0.33 headwind.
• Cryo Tank Solutions orders decreased by 11.9% in the fourth quarter of 2024 compared to the same period in 2023, primarily due to softer European industrial gas demand.
• Specialty Products segment reported a decrease in gross profit margin by 120 basis points in the fourth quarter of 2024 compared to the previous year, due to specific third-party expenses and inefficiencies.
• The company anticipates potential negative impacts from foreign exchange in 2025, which could have an approximately 2% negative impact on sales.

Q & A Highlights

Q: Can you provide an overview of the 2025 revenue guidance for the four segments? A: Jill Evanko, CEO, explained that the RSL segment is expected to grow high-single digits to 10%. The HTS segment is anticipated to grow due to LNG sales, which are expected to be higher in 2025 compared to 2024. CTS is projected to grow mid-single digits, and Specialty Products will see growth driven by backlog conversion, particularly in carbon capture projects.

Q: How does the LNG backlog convert to revenue in 2025, and what impact does it have on HTS margins? A: Jill Evanko noted that revenue from large LNG projects typically starts six to eight months after order placement. The timing of the Woodside order, received in Q4 2024, suggests revenue will flow through 2025, with a step-up in the second half. LNG projects contribute positively to HTS margins, especially when using IPSMR technology.

Q: What is the outlook for the CTS segment, particularly regarding China? A: Jill Evanko mentioned that CTS had a strong start to 2025, despite a slowdown in industrial gas demand in China and Europe in 2024. The company is optimistic about order and sales growth in CTS for 2025, supported by a recently executed LTA with an industrial gas major.

Q: Can you elaborate on the NRU market opportunity and its potential size for Chart Industries? A: Jill Evanko explained that NRUs can range from $20 million to $75 million in Chart content, depending on the scope. While currently a small part of the business, there is significant customer interest, and the company expects this market to grow meaningfully.

Q: What is the expected conversion rate of the 2024 year-end backlog into 2025 revenue? A: Joe Brinkman, CFO, stated that approximately 60% of the year-end 2024 backlog is expected to convert into 2025 revenue. This is supported by throughput initiatives and the nature of projects in the backlog, such as large LNG projects like Woodside.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.