Chart Industries, Inc. (NYSE:GTLS) Q4 2022 Earnings Call Transcript

Chart Industries, Inc. (NYSE:GTLS) Q4 2022 Earnings Call Transcript February 24, 2023

Operator: Good morning and welcome to the Chart Industries, Inc. 2022 Fourth Quarter and Full-Year Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. The company’s release and supplemental presentation was issued earlier this morning. If you have not received the release, you may access it by visiting Chart’s website at www.chartindustries.com. A telephone replay of today’s broadcast will be available following the conclusion of the call until Friday, March 3, 2023. The replay information is contained in the company’s press release. Before we begin, the company would like to remind you that statements made during this call that are not historical facts are forward-looking statements.

Please refer to the information regarding forward-looking statements and risk factors including in the company’s earnings release and latest filings with the SEC. The company undertakes no obligation to update publicly or revise any forward-looking statement. I would now like to turn the conference call over to Jill Evanko, Chart Industries CEO. You may begin.

Jillian Evanko: Thank you, Justin. And thanks everybody for joining us this morning. With me today is Joe Brinkman, our CFO. And together, we will walk through the presentation that was released this morning. While the deck has numerous updates that can be reviewed at your convenience, our formal remarks today will focus on our 2023 outlook, our record fourth quarter and full year 2022 results, the current operating environment, numerous tailwinds that both Chart and Howden are experiencing, and the status on the closing of our pending Howden acquisition. Before we get into our 2022 results and how they springboard us into our reiterated 2023 outlook, note that everything included in the supplemental presentation and our formal remarks today relates to continuing operations.

We have reached a preliminary settlement in the Pacific Fertility Clinic litigation matter related to our 2020 divestiture of our Cryobio business. And as noted in the press release, this will be included in discontinued operations. We were very pleased to put this episode from our prior divestiture behind us and resolve these 217 cases. More specifics regarding the settlement will be included in our 10-K filing. Starting on slide 4, we reiterate our Chart standalone outlook for 2023 for sales in the range of $2.1 billion to $2.2 billion. We are confident in this range given our strong visibility and further supported by the five items on the bottom of the slide. First, it is not unusual for project revenue to shift between quarters. We anticipate realizing pushed fourth quarter 2022 revenue in 2023, but we did not increase our outlook for that timing shift.

Second, our outlook does not include any additional mid or large project orders between now and the end of the first half of 2023 which could provide additional revenue in the second half of the year. Third, even though we are seeing end market improvement in HLNG vehicle tank sales, our sales forecast for those HLNG tanks is flat with 2022. Fourth, as of the end of 2022, we had record backlog of $2.3 billion, with approximately 60% of the full year 2023 sales outlook already in backlog, higher than in prior years. And finally, we have existing capacity to deliver on our backlog and any potential new orders that could materialize throughout the year. We are also reiterating our previous 2023 guidance associated with our prior adjusted non-diluted earnings per share outlook, which was a 2023 standalone full-year equivalent adjusted EBITDA of $440 million to $480 million, which you see.

We will be using EBITDA as a financial metric going forward. In light of adjustments, cost and variable metrics and timing associated with the Howden acquisition, we will not provide standalone Chart adjusted earnings per non-diluted share for 2023. Yet following the close of the Howden acquisition, we will provide updated combined company guidance for the calendar year 2023 for sales, adjusted diluted earnings per share, EBITDA and adjusted free cash flow. All of the current share count and interest information as of now is included in the supplemental presentation. Our adjusted 2023 full-year free cash flow is also reiterated in the range of $250 million to $300 million, including our reiterated capital expenditure outlook of $60 million to $65 million.

Effective in the results presented today for the fourth quarter of 2022, we are no longer adjusting inventory items for free cash flow. Seasonally, as in past years, our first quarter is typically our lowest quarter of the year, and we expect that normal first quarter seasonality in 2023. Given this and the timing of our backlog, we expect quarterly revenues, gross margin and operating margins to continue to increase sequentially over the course of this year. The walk in the middle of this slide shows our backlog as of the end of 2022 that’s available for 2023 sales recognition, giving a strong visibility to our year, as well as book and ship for the year, which is consistent with prior year’s book and ship activity. Moving to slide 5, this shows each of our segments and the anticipated standalone year-over-year 2023 full year growth.

We have the strongest backlog that we have ever had. And that supports confidence in Heat Transfer Systems, Specialty Products and Cryo Tank Solutions outlook. In Repair, Service and Leasing, lifecycle, which is our field service group, had the largest order month in December of 2022 and continued with a strong start to 2023 orders, supporting strong first half 2023 RSL sales and margin. One example is a recent field service order for $2.6 million in the Middle East. We have included a section in the deck on slide 10 through 16 that provides specifics for end market tailwind and their positive impact to Chart and Howden and even more so to the combination of our companies together. We’ll not spend time on this call today on those detailed slides, but rather speak to an overview as shown on slide 6.

Not only do we as Chart have our largest commercial pipeline for the next two years, we also have started 2023 very strong from an order perspective, with over $285 million in orders in January alone. So, let me give a few market condition updates by segment. Related to HTS, we have seen more orders recently related to cryoplants being built by midstream companies and we’re seeing steady turnaround work in petchem. Biofuel and renewable diesel activity continues with large air cooler demand and demand with our LNG customers continues at robust levels. Small scale and floating LNG continued to advance with several orders expected to be released in 2023. And we do also expect further Big LNG activity this year in our order books. This expectation is not only for process technology and equipment, it is also for more opportunities for nitrogen rejection unit studies and potential NRU implementation orders.

Related to Specialty Products, in hydrogen, we’re seeing broader geographic penetration in places such as Korea, China and Canada, as well as additional subsegments, such as utility power generation, like the energy vault order we just received, as well as marine activity in hydrogen picking up for storage and fuel systems. Multiple government funding programs are incentivizing partnerships like the US Department of Energy hydrogen hub consortiums, where we are also well positioned as is Howden for opportunities in production, transportation and export projects. We’re seeing increasing interest with heavy duty fuel cell trucks, driving demand and order activity for our hydrogen fuel station equipment with multiple customers. In carbon capture and storage, opportunities are growing in both size and quantity, driven by expansion of brewery and wineries customers, as well as expansion into newer segments such as limekilns, biogas, coffee and dry ice.

CO2 shortages globally are driving immediate demand, and our customers are now looking to move from our large scale carbon capture feed or engineering studies to actual CCUS plant deployment, including our expectation for initial equipment orders in the near term. There’s also a helium shortage, which is driving a number of customers to move ahead with producing more volume, resulting in us seeing a heavy increase in quotation activities for our helium process technology. Food and beverage demand is also continuing its steady increase and space exploration has kicked off 2023 with high demand levels, a strong funnel of projects and multiple million dollar plus orders. Strength in our water treatment business continues as our average opportunity size is increasing, and we see significant Chart water opportunities for growth ahead in international regions where access to clean drinking water and wastewater treatment is now receiving government funding.

And for Cryo Tank Solutions, primarily related to industrial gas, our customers in this market have told us that they have all budgeted for normal year-over-year growth and orders are in line with that so far in 2023. So, we included slide 7 to show some of our 2023 year-to-date orders because it demonstrates not only these macro tailwinds just described, but also our continued broad based demand. I won’t go through everything here, but pointing out just a couple of these so far in 2023, including an order for LNG systems with Wison Heavy Industries for $115 million, a floating LNG order for brazed aluminum heat exchangers for $19.5 million and additional POs for our liquid hydrogen and oxygen trailers, plus a water purification system for electrolyzer production.

We have very strong commercial movement in carbon capture, as I just described the market tailwinds, both large and small, with orders for fans for a major direct air capture project, tanks and ORCAs for methane elimination, our first sale of Earthly Labs for CiCi Oaks units to a beverage distributor, and an expanded engineering work with KAUST in the Middle East. We announced our definitive agreement to acquire Howden, a leading global provider of mission critical air and gas handling products and services on November 9, 2022, with an anticipated closing date in the first half of 2023. Moving to slide 8, we completed our financing activities related to the transaction in December, within our previously stated anticipated blended weighted average cost of debt range.

We have received clearances from all, except two of our total required regulatory approvals. Pending receipt of these two remaining international regulatory approvals, we now anticipate that the transaction could close in the next five days and are optimistic based on information received as recently as this morning that it could close before the end of the first quarter of 2023. As a reminder for all the slides that refer to Howden in this presentation, we’re still pending those approvals before closing. Both teams remain laser focused on execution and Howden, like Chart, continued to experience strong demand from numerous macro tailwinds in their end markets in the fourth quarter of 2022 and into the first quarter of 2023. Our previously shared pro forma 2023 for the combined business outlook remains unchanged.

Our view for the 12 months pro forma adjusted 2023 EBITDA is approximately $1 billion, inclusive of cost synergies, and we continue to anticipate reaching our estimated pro forma net leverage ratio target in the high 2x range by the end of 2024. We reiterate our financial policy as previously laid out and included in the appendix of the deck. We’re currently pursuing divestitures of two product lines related to the combined business. While there can be no assurances of the completion of or proceeds from these activities, we continue to target a completion of these within the next three to six months, and continue to anticipate combined proceeds of approximately $500 million from these divestitures. Slide 9 is a slide that we have shared previously and are including today to reiterate our confidence in the combined business 2024 outlook.

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And the next section, as I referred to earlier, slides 10 through 16 are those detailed end market updates and the positive impact the nexus of clean end markets have on Chart/Howden and the combined offering. For now, let’s move ahead to slide 18, Joe.

Joe Brinkman: Thanks, Jill. Slides 18 through 20 are updates on our supply chain, as well as our pricing strategies and actions. On slide 18, you can see our top raw material inputs, as well as the global container freight index. We are back to end of 2020 levels for aluminum, carbon steel and freight, while stainless steel is out of its peak range, but not back to pre-COVID levels. Turning to slide 19, while we are not yet seeing consistency in the input costs, we are seeing better availability from the supply chain as well as tempering costs and expect that to continue this year, barring no unforeseen geopolitical events. We also expect the cost of energy to be more stable this year than in the prior two. First column of data from the left hand side of the slide is changing costs from January 31 of 2022 to January 31, 2023.

You can see a decline in cost in all three. The second column shows the variability within the 2022 year. So while cost is tempering, we still must strategically source from our local and global supply base. With the variability still in play, we continue to hold our pricing practices that we have deployed the past 24 months, as well as continue to surgically increase price as shown on slide 20. We’re also continuing to maintain our surcharge. We have not seen this impact demand to date. I will now hand it back to Jill to cover the next section, our fourth quarter and full year 2022 results.

Jillian Evanko: Both the fourth quarter and full-year 2022 were records in multiple reported as well as adjusted metrics. As you can see on slide 22, our full year set historical records in reported backlog, orders, sales and EBITDA as well as adjusted EBITDA. Additionally, not shown here is our full year 2022 record reported gross profit and record reported operating income. The bottom row of slide 22 shows fourth quarter of 2022 reported records, which include record backlog, sales, operating margin and EBITDA as well as the adjusted metrics for both operating margin and EBITDA. We’re pleased with all these records, and I am also very pleased with the fact that each month in the fourth quarter of 2022 had both gross margin as a percent of sales and operating margin as a percent of sales sequentially increase with our exit rate from December of reported gross margin as a percent of sales of 31%.

Slide 23 shows that our records are broad based, not just one part or segment of the business driving the growth in each area. For the full year, all four segments had record sales, and three of the four segments posted record orders, operating income and operating income as a percent of sales. Moving on to slide 24, we had our four highest order quarters in our history in 2022. The first three quarters of 2022 included Big LNG orders, the first time in our history where we had multiple Big LNG orders in a year. Fourth quarter orders were $525.9 million and did not include any Big LNG. This contributed to the full year 2022 order growth of 65.9%. Over-the-road vehicle tank orders, which were impacted by the higher natural gas price in Europe in 2022, declined 85% year-over-year.

And when excluding both Big LNG and over-the-road tanks, total orders were up 37% as shown on the last row of the table on slide 24. And as mentioned previously on prior calls, average orders per quarter for the five years of 2016 through 2020 were $251 million per quarter. For 2021 and 2022, ex Big LNG, average orders per quarter were $479 million. We expect our baseline quarterly orders to be approximately $350 million to $375 million and can increase in any given quarter from there depending on mid to large projects that get booked. The bottom of slide 25 is important to point out. Remember that we have our HLNG vehicle tank for Class 8 heavy duty LNG trucks and we introduced our liquid hydrogen onboard tank as well. Prior to 2022, we sold the HLNG tanks to only a handful customers.

While the business was down last year, we still sold tanks to 16 different customers, 9 of whom were new and 2 customers had purchased the liquid hydrogen onboard tanks from us. We believe our highly differentiated over-the-road tank offering will be a key part of our unique solution set for both LNG and hydrogen as our partners commercialize their . Even with the decline in over-the-road vehicle tanks, we had record orders in 2022, both with and without Big LNG, driven by a variety of small to mid-sized projects in the $15 million to $50 million range, as shown on slide 26. These are the types of full solution projects that support less cyclicality as we book more of them. In the fourth quarter of 2022, we booked New Fortress Energy’s Fast4 and Fast5 projects as well as a $22 million petchem project and a large order with a key private space launch company.

We also received the letter of intent for a hydrogen liquefier from a longtime industrial gas customer, which is not yet booked into our backlog, but we do expect to book it in the first half of 2023. We also currently have an active pipeline for 27 other hydrogen liquefier opportunities. Fourth quarter and full-year 2022 were both records for sales. Slide 27 shows our 20% plus organic growth, both for the full year as well as Q4 over Q4 2021 on the table marked A. Even with the 4% foreign exchange headwinds, we grew 22.4% for the full year. Section B on slide 27 shows the 22.4% year-over-year sales growth. And similar to orders, the decline in sales in our short book and ship over-the-road vehicle tank sales was 79%. Excluding that, our sales for 2022 would have been an increase of 33.5% compared to the full year 2021, which was previously our highest sales year in our history.

Table C walks through the fourth quarter 2022 foreign exchange headwind to sales and specific timing shifts of revenue into 2023. One of this is lost business, and as mentioned earlier, contributes to our confidence in our reiterated sales outlook range of $2.1 billion to $2.2 billion for the full year. The gray box on the right hand side of slide 27 shows that these record sales, both in the fourth quarter and the full year 2022, were broadly supported across multiple end markets and multiple products. Water, space and carbon capture each grew over 100%, while hydrogen, air coolers, brazed and HTS systems each grew more than 47%. Record reported operating income as a percent of sales for the fourth quarter of 2022 of 13.6% is higher than any period adjusted, as you can see on slide 28.

And record adjusted operating income as a percent of sales of 17% was supported by the sequential increase in reported gross margin and operating margin in each of the three months of the quarter. Slide 29 shows our record fourth quarter of 2022 EBITDA of $102.1 million or 23.1% as a percent of sales. When adjusted for one-time items related to the gain for the revaluation of our investment in Svante following its sale of securities to additional investors including Chevron, share-based compensation and the non-recurring costs reflected in adjusted operating income, adjusted EBITDA for the fourth quarter of 2022 was $97.5 million or 22.1%. of sales. Reported fourth quarter 2022 non-diluted earnings per share was $0.42 as shown on slide 30. When adjusted for one-time items primarily related to Howden deal-related costs, financing, other integration costs and the gain I just described as well as our mark-to-market of our inorganic investments, fourth quarter adjusted non-diluted EPS was $1.67.

Full-year 2022 reported non-diluted EPS of $2.21 is a historical record as is our adjusted non-diluted EPS for the full year of $4.69. Slide 31 shows the fourth quarter to fourth quarter 2021 to 2022 and full year comparisons of adjusted EPS. The meaningful increase in both of these periods is driven by segment operational performance in the result, which is offset in part by tax and interest. Similarly, slide 32 shows the Q3 2022 to Q4 2022 sequential adjusted EPS walk. Sequential operational improvements continued, while tax was a sequential headwind. Slide 33 shows the fourth quarter of 2022 net cash provided by operating activities of $30.5 million and CapEx of $26 million. Capital expenditures in the fourth quarter 2022 included acceleration of the installation of our brazing furnace and production line, our cold box rooftop expansion and putting more leasing fleet assets into service.

Demand for our cores and cold boxes continues at record levels, both for LNG applications of all sizes, oil and gas applications as well as our specialty products, full solution offerings for hydrogen, water and carbon capture. We also continue to see strong commercial activity for our standard leasing fleet, which is primarily mobile transport and ISO containers. When adjusted for Howden related costs, financing costs and income adjustments, adjusted free cash flow for the fourth quarter was $71.5 million. Pointing to the right hand side of slide 33, we did not adjust for the fourth quarter’s negative foreign exchange headwind, the accelerated capacity capital just described and for specific customer receivables that came in early January versus our expectation into the fourth quarter.

Slides 35 through 40 provide more segment details and opportunities ahead. Starting on slide 35, this is our regular LNG opportunity outlook. And I point out in rows one and two, we have a new international opportunity that arose since our last update. And in row three, our potential opportunity set has grown as a result of the international additional potential project, as well as potential expanded scope on others in the pipeline, including four heavy hydrocarbon removal systems or NRUs, as I described earlier. We booked multiple small and floating scale projects in fourth quarter, and we also anticipate all sizes of LNG project demand to continue into 2023. We do expect additional Big LNG orders in the year, although we have not included any of those in our outlook.

And we anticipate one in the first half of 2023. And although we don’t show for hydrogen, it’s another end market where the commercial pipeline is growing, including being in various stages of conversations with 786 potential and actual hydrogen customers with over 180 projects that we reasonably anticipate can move to order stage in the next three years. In 2022, we executed 30 individual Memoranda of Understanding with partners. And on slide 36, you can see the end market split, further supporting broad based growth ahead. 10 of these were expect executed in the fourth quarter 2022, including with Wison, VERBIO, Raven for CCUS and hydrogen, and Hydrozonix for water treatment solutions. We’ve already received orders from 13 of these partners to date.

And so far in 2023, we have executed three new agreements with additional partners, including Nikola for hydrogen offerings and MoUs with Rotec for high flow reverse osmosis and water treatment, and with GenH2 to incorporate Chart equipment into their small scale hydrogen liquefaction systems. Our first of kind orders are a differentiator for us. You’ve heard me talk about that previously. And in 2022, we added 89 of these to the order book and 168 over the past two years. You can see a few of the fourth quarter first-of-kind on slide 37, including an award from Guyana Water Incorporated for two projects to support the water infrastructure initiative in Guyana. We also added 327 new customers in 2022. And that’s shown on slide 38. Contributing to these 327 were fourth quarter of 2022 orders from new customers, including energy vault, an order from Yarmouth, Massachusetts for the first ever Flourosorb water treatment solution in the State of Massachusetts, and a pre-FEED study order for SES cryogenic carbon capture technology for Carmeuse and a European in the lime industry, an industry that we anticipate will quickly begin to implement carbon capture utilization and storage solutions.

We’ve already seen repeat orders from 119 of our new customers that we booked in 2021 into 2022.

Joe Brinkman: Chart China, which is primarily reflected in our Cryo Tank Solutions segment, continues to set records, as they did in 2021 and surpassing many of those in 2022. As you can see in slide 39, 2022 reported an adjusted operating income as a percent of sales for Chart China double compared to 2021. They booked the highest number of ISO containers in our history in the year and did all of this very safely with no accidents in the entire year. Also, we are seeing increasing demand, in particular in LNG and industrial gas, in China in the first weeks of 2023. Also, our Repair, Service and Leasing segment is gaining steam, with strong demand coming out of December and into January for field service, as well as continuing to expand our leasing fleet, which continues to provide our customers optionality and certain standard equipment that we have in the fleet.

We have signed 465 new leases in 2022, which is shown on slide 40. We’re also pleased to announce our three-year master service agreement with VERBIO for LNG vehicle fueling station maintenance and monitoring and expect that we can leverage Howden’s aftermarket service and repair capabilities to expand these RSL growth drivers even further.

Jillian Evanko: In the section starting on slide 42, we’ll provide a few updates about Howden. Howden is privately held and we still have the pending approvals I spoke of ahead of closing, so the information here is focused on the combination of the businesses and what they’re experiencing in the markets, which similar to Chart, has very broad based demand. As you can see on slide 42, Howden complements our full solution offering via filling in mission critical equipment into the portfolio, adding more and more options for our customers in our existing end markets, and adding end markets and geographies that are sustainability oriented for which the Chart offering can immediately be utilized via Howden’s relationships. Aftermarket service and repair, which is resilient through a cycle, will be over 30% of the combined business revenues, and that 30% is also 42-plus-percent gross margin in the combined business.

Post close, we’ll continue to report in our four current external reporting segments that you can see on slide 43. You can see on this slide also how naturally Howden fits into our segmentation and adds balance to RSL compared to the other segments. Slide 44 is a page that we have shown previously and have included again as it exemplifies the access that Howden provides to us in these high growth specialty end markets, driven by sustainability, CO2 and energy resilient tailwinds. Our specialty total addressable market size increases meaningfully with the addition of Howden as shown on slide 45. The near term TAM shown here for the coming three years are unchanged from what we showed in our investor deck on January 5, with Howden more than doubling our near-term specialty TAM.

The new information on slide 45 is our anticipated CAGRs for the longer term TAM by end market category. And like Chart, Howden continues to see strong market demand for their solutions and products with numerous wins across a variety of nexus of clean applications. Slide 46 shows four of these recent wins, including diaphragm compressors for Atura Power’s Niagara Hydrogen Centre in Canada, as well as supplying a hydrogen compression solution for Shell’s Holland Hydrogen 1 facility in Rotterdam, which when complete will be Europe’s largest renewable hydrogen plant. In other markets, Howden will install a ventilation optimization system for Gold Fields South Deep gold mine to support a safe working environment and reducing the mine’s energy consumption.

There are numerous other recent Howden wins which can be found on their website. Similar to Chart, Howden partners in the industry. Recent MOUs executed by Howden in the first month of 2023 include with Foreship and Hydrexia, as shown on slide 47. You can read the details on each, both of which are oriented to providing solutions for customers to reduce their carbon emissions with Foreship focused on the marine industry and Hydrexia on hydrogen mobility. We anticipate that both of these partnerships, amongst others, can leverage Chart’s capabilities in marine and hydrogen post close of the acquisition. And now, I’ll hand it back to Brinkman to close out our prepared remarks.

Joe Brinkman: To reiterate what Jill said earlier, both Chart and Howden teams are focused on delivering our commitments, and together we continue to not only be confident in our ability to deliver year one cost and commercial synergies, our teams have also had the opportunity to identify more synergy potential. While we are not adjusting our outlook for these, they have great visibility and actionability, which not only provides confidence to the original figures, it adds further upside potential. Some examples of these are shown on slide 48, including numerous additional offices and other site consolidation in overlapping locations, resulting in $25 million plus in potential synergies, the ability for Howden China to utilize our pressure vessel for compression skids, our digital NDT X ray, all of which adds efficiencies as well as reducing outside spend.

You can also see the commercial opportunities are growing, including with customers in sustainable fuels and marine that are working on e-methanol looking for total solution, process optimization and a reliable partner for all critical components that have approached us to discuss partnering. And in the final section of our prepared remarks, Jill and I want to thank our One Chart team members for their execution of a record year, not just in the multiple record financial metrics, numerous certifications, as shown on slide 50, but in our ongoing ESG efforts, which include having our lowest safety incident rate in our history and over 75% of our sites with no accidents in a year or more. It is our 5,100 amazing team members that continue to drive our profitable growth and do so with our heart of innovation.

We congratulate Andrea, Adam and Rachita for winning our 2022 Global Innovation contest with their amazing ideas as shown on slide 51. It is these and many other innovations that result in our industry leadership position, as you can see on slide 52. We want to congratulate both Chart and Howden teams for being named finalists for the Hydrogen Technology of the Year Award in the 2023 Hydrogen Future Awards, which recognizes companies for their exceptional performance, innovative design and contributions to the growth and development of the hydrogen industry. Slides 53 and 54 lay out some of the activities and accomplishments of both Chart and Howden in ESG, both internally and for our respective customers. Chart’s annual sustainability report will be released in April of 2023.

And we are reiterating our commitment to reducing our carbon intensity 30% by 2030 compared to our 2020 baseline as well as pledging carbon neutrality by 2050, inclusive of the pending Howden acquisition. Now, Justin, please open it up for Q&A.

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Q&A Session

Operator: And our first question comes from Chase Mulvehill from Bank of America.

Chase Mulvehill: Let’s see. I guess the first question. If we just think about the 2023 order outlook, obviously, you gave a lot of positive commentary there, Jill, appreciate all the color. I know 2022 was obviously an exceptional year for orders. So maybe if you could kind of give us some €“ you gave us some kind of high level comments, but maybe puts and takes from a high level, what might be up, what might be down? And then, do you think it’s possible to hold orders flat? I know that might be a big ask because 2022 orders were really strong. Is it possible to kind of hold orders flat when we look at 2023?

Jillian Evanko: Starting with 2022, as you mentioned, it was an exceptional order year with our four highest order quarters in our history all being in 2022. With that said, we’ve provided the $620.7 million of Big LNG orders. My commentary, let me start there on Big LNG, is that we do expect to be released and book more than one Big LNG order in 2022. I don’t think, in total, that it will be $620 million, but it certainly is expected to be in the hundreds of millions of dollar sizes for the Big LNG orders that we expect this year. Then when you go ex-Big LNG across the board, as you mentioned in your question, our end markets are just hitting on all cylinders right now. And so, I don’t want folks to get too far out over their seats, hence why we tried to give kind of that level baseline of the $350 million to $375 million a quarter.

But we are seeing more and more activity in these small scale and mid-scale projects of the $15 million to $50 million range. I provided the $285 million January month purposely, so that folks can try to hone in on how they see the first quarter shaping up. We don’t expect any of our non-Big LNG end markets in 2023, from an order book perspective, to decline. With that said, I think we’ve indicated the HLNG vehicle tanks, and we’ve forecasted that as flat. We’re starting to see some end market improvements there. So that’s probably one of the ones that I modeled as a slower grower. And in our traditional oil and gas and energy business, we’ve seen an uptick in activity in the last six months or so and the year has started out strong as well in that order book.

That is probably the one other market I’d point out that does have some variability around what you see in nat gas pricing and in the price of oil driving customers’ CapEx behavior. So all in all, we would expect ex-Big LNG, the order book to be up this year.

Operator: And our next question comes from Eric Stine from Craig-Hallum. Eric, your line is open. And our next question comes from Sam Burwell from Jefferies.

Sam Burwell: Actually, I wanted to ask another one on the big LNG side and appreciate the color that you gave around that to this point. But the projects, at least in the US, that are probably most likely to FID near term are all of the more traditional larger scale train variety and not modular train projects. So I was wondering, does that imply that you guys are confident that you can win market share for that type of LNG project? I’m just curious for color on your outlook for winning new big LNG projects going forward that might potentially be different from the stuff that you’ve done for Cheniere Venture Global?