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

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And we had taken that at lower margin because we see an incredible business opportunity ahead with that particular customer. So, that’s reflected in the fourth quarter, as well as there were two hydrogen liquefier rev rec items that pushed out from Q4 into 2023. That would have helped €“ that would have been in higher margins than what we had before. So on specialty, we forecast the HLNG, as I commented, flat in 2023 to 2022. And so for the full year, you were at about 34% to 35.5% €“ we call it 34% to 35% for the full year specialty gross margin.

Operator: And our next question comes from Eric Stine from Craig-Hallum.

Eric Stine: Obviously, strong orders in fourth quarter and you gave the January number. Is there any way to quantify whether actual or from a high level, what that number would look like with Howden, given the additional content?

Jillian Evanko: As you said, we’re very pleased with $526 million of orders without any Big LNG in the fourth quarter. So, we purposely wanted to direct those to ensure they understood that it’s not a sequential Q2 to Q3 to Q4 is not actually a bad thing in terms of how the orders rolled out in 2022, but four of our highest order quarters in our history were in that year. So I just take the first part of your question to reiterate that $526 million in a quarter is pretty darn good. With that said, the real question you’re asking on what could it look like with Howden. I’m unable at this point to give you what their fourth quarter orders were. But I am able to say that seeing very, very similar trends in the business and strength related to the end markets that I’ve described.

A very fair combination would be to double it, to double ours. That would be right down the fairway in terms of how you look ahead to the one plus one together. Now, additional content from the combination thereof, we’ve sized year one commercial top line opportunity at $150 million. But the way that I would think about additional solution set order book is probably an incremental 20% to 30% on a full solution offering of order size that we would get.

Eric Stine: I guess then my follow-up, just curious, you’re getting close, but any thoughts on early reception to the deal, either from existing customers or some of the new customers that you’ve identified for Chart?

Jillian Evanko: We have had exceptionally positive reception from existing customers, both Howden and Chart, as well as had some opportunities for new customers. Obviously, like you said, we’re in that period between sign and close, where we continue to operate as individual businesses on our own, but we can immediately, out of the gate, take advantage of the one global commercial organization that we’ll continue to deploy in the combined business. For me, it’s pretty neat to see the two companies and the people working together and the ideas that have been generated between the two of them. And the ideas are endless when you start looking at CCUS and water and hydrogen. So, I’m bullish that we’re going to come out of the gate strong, not just on the synergy side, but just seeing some of these customers.

And I think our new customer metric will grow in 2023 compared to 2022 meaningfully, given the combination. And then for our sales team that hopefully is listening, they actually committed to €“ without us having to push on them committed to an exceptional increase €“ expectation of the combined business in the order book because they see the value between the two. So customers are excited about the combination, and they see the uniqueness of having our cryogenic stationary equipment that in almost all cases in the full solution requires rotating equipment with it. And this combination, there isn’t any other company that has that combination of stationary and rotating equipment for these types of applications together.

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