Pavel Molchanov: Thanks for taking the question. Actually piggyback on the previous question, but more zooming in on top line. Given how much the business mix has changed, particularly the recurring and service revenue, is the kind of progression, first half versus second half going to be meaningfully smoother going forward versus the legacy Chart, which was very beckon weighted?
Jill Evanko: Yes. Hey, Pavel. Thank you for the question. So the short answer is yes. The longer answer is that the way you – I’ll give you an example. The way that the larger projects, timing of deliveries that will take a big LNG project. In the second quarter of this year, we had more big LNG related revenue because there was the delivery of a train for a customer that we got that revenue into the quarter. And we had less so in the third quarter because we’re starting work on the next train or the next series of trains. So there is a little bit of kind of how those project delivery schedules play out much smoother than historically. If you look at our backlog, you will have a step up from first half to second half in 2024, just based on the big LNG projects that are in the backlog. But not nearly kind of this Q1 to Q2 to Q3 and then down in Q4 like it used to be.
Pavel Molchanov: Thank you.
Joe Brinkman: Yes. I would just add that just one thing to add Pavel is, our growing business is naturally going to have a bigger fourth quarter than first quarter just because it’s growing.
Jill Evanko: Did that answer your question, Pavel?
Pavel Molchanov: Perfect.
Operator: Thank you. Next question will be from Craig Shere at Tuohy Brothers. Please go ahead.
Craig Shere: Tuohy Brothers. Thank you.
Jill Evanko: Hey, Craig.
Craig Shere: Hi. So, given the commercial synergies are kind of doubling original guidance, just kind of scratching my head a little bit that shouldn’t that have aided 2023 revenue performance and kind of related to this question, can you elaborate a little bit on the elongation of the non-big LNG book to bill?
Jill Evanko: Yes. Thanks, Craig, for the question. So almost all of the synergies that we have booked, the orders are full solution style bookings. And so these have engineering timing and these in many cases are going to be across 12 months to 36 months type of revrec cycles. So you don’t really get anything in the very short term. And the amount of synergy we booked in the third quarter, you’re really going to start to see that in the first quarter in terms of sales. In terms of the elongation of the non-big LNG book to bill, what I would say here is that we – maybe I’ll turn the question slightly differently. We continue to expect to see a book to bill above one. That’s kind of the way we think about continuing to be able to grow the backlog, to grow the top line at that 15% plus and having this solution – this full solution differential is a way that we get sticky with these customers.
And in many, many cases there’s multiple projects behind the ones that are in the backlog. So one of the points that I think is really important in the shift of our business from what we used to look like is that we’re – and I’ve said this time and time again here in the last hour, is that we’re no longer reliant on one or two things. And that gives us that confidence level to be able to grow through the cycle. And we love big LNG. But we can grow without big LNG. Now, I do want to hit the point home that we continue to expect big LNG orders here and we have a really good line of sight to the ones that we know we have content on across the coming foreseeable years here. So it’s a great position to sit with record backlog, but also with the visibility we have to the full solution commercial pipeline that we expect to continue to come into the order book here throughout the years ahead.
Craig Shere: Thank you.
Operator: Thank you. Next question will be from Ati Modak at Goldman Sachs. Please go ahead.
Ati Modak: Hi, good morning, team.
Jill Evanko: Hey Ari.
Ati Modak: Can you help us understand the moving theses in the 2023 guidance between the $100 million in revenue slippage, what segments that affects? And to Craig’s question from earlier, the synergies and the asset sales that have occurred? And then 2024 guidance seems like it remains unchanged. Did that already contemplate the diversity or are there any offsetting factors there?
Jill Evanko: Yes. Thanks for the question, Ati. So, as we pointed out in our remarks there were a few factors that went into the timing shift. And I’ll say this again, I say it every quarter, two to three months in our business especially now that we have these long, larger projects, it’s really hard to get exact and it’s not lost revenue, it’s timing of the revenue associated with whether that’s POC for supplier deliveries or progress. Whether that’s customers that call us and say, hey, we want to add a capability or tweak a design to get more output from the nameplate production or whether that’s us moving and prioritizing a customer because they have an urgent situation and we get less revenue wreck in a quarter off of that.
So that’s kind of the tactical side of things. And then we had at the end of the second quarter, obviously Roots was in disk ops, but we had expected Cofimco to close pretty close to year end of 2023 as we’re excited that it’s going to close on the 31st of October for that cash in. We hadn’t expected to have the American Fan divestiture done in 2023, but that was really a nice win-win. It’s ending up in a really good home for the fact that it’s 80% plus Navy oriented government, which isn’t core to our business. So those were the couple of divestiture piece that kind of shifted timing for the rest of 2023. When we look ahead to 2024, what we would share here in terms of the outlook being unchanged is while our guide in 2024, we haven’t really given – we had not given a revenue guide, we had given an EBITDA guide.
And we had known the original asset sale perimeter, which I would point out again that we hit the number, the target even with a subset of the original perimeter just seven months post close of the acquisition. But when we look ahead, we had commercial synergies that we talked about on the last question from Craig that now come in stronger earlier into the order book. So that gives us earlier revenue in 2024 that which allows us to cover what we had sold out of the portfolio. If I were distilling it to one answer, that’s really it. And then of course, there’s things like the way that we talked about the step up in first half, the second half, and the timing of when these projects revenue recognition kind of ramps up. And having booked the big LNG order at the end of the second quarter, we see a good line of sight to that revenue ramping up.
We have almost proceed on that, so that revenue really ramping up mid-2024 as well.
Ati Modak: Thank you.
Jill Evanko: Got it.
Operator: Next question will be from Rob Brown at Lake Street Capital. Please go ahead.
Rob Brown: Good morning, Jill and Joe.
Jill Evanko: Hey Rob.
Joe Brinkman: Hey Rob.
Rob Brown: Just wanted to follow up, given the really strong commercial synergies that you’re showing and really better than you expected, how do you see that continuing? Do you expect that to kind of flow through in future periods? And do you sort of think that that can be better than you ultimately expected?
Joe Brinkman: No. We’ve been continually surprised by all the synergy opportunities that we’re seeing. As we pointed out in our remarks pivoting to more of a solutions provider here, you’ve got the traditional cryogenic liquid background of Chart. You’ve got the gas side of the business at Howden really coming together for solutions for customers in the hydrogen space and in other spaces. So, yes, continue to expect more synergy wins as we put these offerings together.
