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

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Jillian Evanko: And what we like about the combination, as well as all the numerous things we’ve already said is, to Joe’s point, when you’re selling a full solution project to renewable customers, that full solution is different than a component sale of OEM on the specialty side, and we love the ability to pull through the digital elements and the footprint of service and repair the opposite way through to the Chart business that we didn’t have as strong of a position as they do.

Operator: And our next question comes from Rob Brown from Lake Street Capital.

Robert Brown: I guess more color on the hydrogen liquefaction kind of project pipeline. We talked about quite strong, I think 27 projects in the pipeline. What’s sort of project size and what are the sort of dependencies of those going forward?

Jillian Evanko: Thanks for picking up on that stat because it is a pretty strong pipeline. And I think it’s going to grow. We don’t necessarily talk about it every quarter of what that pipeline looks like. But what’s nice about the current construct of those discussions is that they’re with a variety of really widespread set of customers, ranging from utilities as an example to industrial gas folks to pureplay hydrogen operators. So, we like the variety of the end markets these customers are in. The size of these plants is starting to get larger. So what we would have talked about in 2021 and really for the most part in 2022 was 15 tonne per days, and started to see 30 tonne per days. Now we’re seeing 30 tonne per day, 32 tonne per days, even folks that are saying, okay, I want to do a 90 tonne per day, which may be a construct of three 30s as an example.

But the size of these projects is getting larger on an absolute basis, which in turn gives us more content opportunity because, as the project gets larger, obviously, there’s more that goes into that. And the other thing I would say that I want to see develop more is a standard size and a standard package. And our teams, our engineering teams are working on that right now. Because I do think that will facilitate expediting decision-making with customers versus everybody starting from their own idea of what the plant should look like. So I think there’s a great opportunity as well to accelerate the order book over the coming years with respect to a standard plant size.

Operator: And our next question comes from Walter Liptak from Seaport Research.

Walter Liptak: I wanted to ask two quick ones. One, there was some revenue that pushed from the fourth quarter into 2023. I wonder if you can just give us some color on how much and why and things like that. And then second on the gross margin, you guys called out this up in December. And wonder if you could just clarify why that step up happened and are we going to see that follow through into the first quarter?

Jillian Evanko: Absolutely. Let me start with your first. So, in the supplemental presentation on €“ and I think it was kind of in the late 20s page number wise. We had a chart that described some of the revenue that moved from Q4 into Q1. There were three main drivers on that. And one of them, there were three specific liquefier projects that are percent of completion revenue. And they had components that we had expected to receive in Q4, really in the month of December, that didn’t come in from our supply chain in time to be able to recognize that revenue. That was the largest bucket of the shift. And those projects are well underway, so certainly will be in 2023. And then, the second category was around timing of field service job deployment.

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