CLEVELAND, July 30, 2009 (GLOBE NEWSWIRE) -- Chart Industries, Inc. (Nasdaq:GTLS), a leading independent global manufacturer of highly engineered equipment used in the production, storage and end-use of hydrocarbon and industrial gases, today reported results for the second quarter ended June 30, 2009. Highlights include:
* Increased 2009 earnings expectations
* Completes two strategic acquisitions
* Cash and short term investments increase to $205.4 million
Net income for the second quarter of 2009 was $17.8 million, or $0.61 per diluted share. This compares with second quarter of 2008 net income of $22.2 million, or $0.76 per diluted share. The second quarter of 2009 included $4.1 million in restructuring costs, or $0.10 per diluted share, primarily related to planned workforce reductions as part of the Company's cost reduction initiatives. Net sales for the second quarter of 2009 decreased 21% to $155.3 million from $197.8 million in the comparable period a year ago. Gross profit for the second quarter of 2009 was $55.9 million, or 36.0% of sales, versus $64.0 million, or 32.4% of sales, in the comparable quarter of 2008.
"Our cost reduction initiatives are driving strong financial performance despite continued weakness in order entry," stated Sam Thomas, Chart's Chairman, President and Chief Executive Officer. "During the quarter we continued to implement aggressive cost containment actions to right-size our businesses, but we also continued to experience good project execution in our Energy and Chemicals ("E&C") business."
Two acquisitions completed during the second quarter of 2009 were Chengdu Golden Phoenix Liquid Nitrogen Container Co., Limited ("Golden Phoenix"), a manufacturer of liquid nitrogen aluminum storage containers used primarily for artificial insemination for animal breeding located in Chengdu, China, and Tri-Thermal, a Tulsa, Oklahoma-based supplier of replacement parts for air cooled heat exchangers. Both of these acquisitions were all-cash transactions.
"Golden Phoenix, which built a new manufacturing facility in 2007, will allow us to expand our Biomedical geographical manufacturing footprint in China to support the growing Asian demand for aluminum storage products," stated Mr. Thomas. "The Tri-Thermal acquisition allows us to build our E&C aftermarket business and provide significant value-added service to our customers. While these transactions are relatively small, they are important to our strategy of adding niche businesses that can expand our product offerings and services to our customers globally."
As previously announced, the Company's Distribution and Storage ("D&S") business is building a new 40,000-sq. ft. industrial gas equipment repair center in Reno, Nevada, to better serve customers in the Western U.S. The facility is expected to begin receiving equipment for repair in September and to be fully operational by January 2010.
Backlog at June 30, 2009 was $224.6 million, down 27% from the March 31, 2009 level of $307.5 million. Orders for the second quarter of 2009 were $71.4 million compared with first quarter 2009 orders of $89.3 million.
"As expected, orders remained weak during the quarter, particularly in our D&S and E&C businesses," stated Mr. Thomas. "We remain cautious regarding second half 2009 order activity, but continue to see strong bid activity for large projects that we believe will lead to improved order intake by the end of 2009 or early 2010."
Selling, general and administrative ("SG&A") expenses for the second quarter of 2009 decreased $2.8 million to $23.5 million, or 15.1% of sales as a result of lower employee related costs, travel and entertainment, and outside consulting expenses due to cost reduction initiatives. SG&A expenses were $26.3 million, or 13.3% of sales, for the same quarter a year ago. Excluding the recent acquisitions and expansion, workforce levels are now down 15% from the end of last year due to the aggressive cost reduction efforts thus far.
Income tax expense was $8.2 million for the second quarter of 2009 and represented an effective tax rate of 31.5% compared with $9.2 million for the prior year quarter, which represented an effective tax rate of 29.3%. The increase in the second quarter effective tax rate was primarily due to an increase in the mix of domestic earnings which are taxed at a higher rate.
Cash and short-term investments were $205.4 million at June 30, 2009, which is $28.2 million higher than balances at March 31, 2009.
SEGMENT HIGHLIGHTS
E&C segment sales declined 9% to $70.8 million for the second quarter of 2009 compared with $78.2 million for the same quarter in the prior year. E&C gross profit margin increased to 41.5% in the 2009 period compared with 32.1% in the 2008 quarter largely due to favorable project mix and better project execution, including the revision of cost estimates as we near completion on a number of projects. In addition, order cancellation fees were also billed in accordance with contract terms providing margin improvement. This was partially offset by a write-off related to a customer payment default. The net impact of these items improved E&C margins approximately 4% during the quarter. While orders remain soft, particularly in E&C's product lines, we continue to see strong bid activity from key projects in Australia and Asia.
D&S segment sales declined by 32% to $63.3 million for the second quarter of 2009, compared with $93.2 million for the same quarter in the prior year. The decrease in sales was largely due to lower prices and volume in our packaged gas product line as well as the impact of a stronger dollar against the euro and Czech koruna. D&S gross profit margin of 30.6% in the quarter was essentially unchanged compared with 30.8% a year ago. Order trends in D&S were also down, reflecting the current economic environment compared to the prior year quarter which represented one of the strongest quarters for order intake in recent history at D&S.
BioMedical segment sales declined by 20% to $21.2 million for the second quarter of 2009 compared with $26.4 million for the same quarter in the prior year. Lower volume led to declines in both biological storage and medical respiratory product sales. In addition, other product sales declined due to the impact of reduced production from the previously announced shutdown of the Denver, Colorado BioMedical facility. BioMedical gross profit margin declined to 34.0% in the quarter compared with 38.4% for the same period in 2008. This was primarily due to lower volume and costs associated with the planned workforce reductions and Denver facility shutdown.
OUTLOOK
Based on year to date results, current expectations and our cost reduction initiatives, the Company is increasing the range of its previously announced full year earnings per share guidance to $1.50 to $1.70 per share on approximately 29.0 million weighted average shares outstanding. Sales for 2009 are now expected to be in a range of $580 to $620 million. This revised guidance includes the impact from restructuring charges of $0.10 per share incurred during the second quarter and another $0.02 per share is anticipated over the balance of the year for remaining costs primarily related to the Denver facility shutdown. This compares with our previous guidance of a sales range of $600 to $640 million and diluted earnings per share range of $1.30 to $1.60 per share.
"With $205.4 million of cash on hand, our balance sheet remains strong with significant liquidity," continued Mr. Thomas. "As we did this past quarter, we will continue to take advantage of potential market opportunities now and in the future as economic conditions improve."
FORWARD-LOOKING STATEMENTS
Certain statements made in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning the Company's plans, objectives, future orders, revenue, earnings or performance, liquidity and cash flow, capital expenditures, business trends, and other information that is not historical in nature. Forward-looking statements may be identified by terminology such as "may," "will," "should," "expects," "anticipates," "believes," "projects," "forecasts," "outlook," "guidance", "continue," or the negative of such terms or comparable terminology. Forward-looking statements contained in this news release or in other statements made by the Company are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control, that could cause the Company's actual results to differ materially from those matters expressed or implied by forward-looking statements. These factors and uncertainties include, among others, the following: the cyclicality of the markets that the Company serves and the vulnerability of those markets to economic downturns; the negative impacts of the recent global economic and financial crisis; a delay, significant reduction in or loss of purchases by large customers; fluctuations in energy prices; the modification or cancellation of orders in our backlog; our reliance on key suppliers and potential supplier failures or defects; competition; general economic, political, business and market risks associated with the Company's global operations; fluctuations in foreign currency exchange and interest rates; potential future charges to income associated with potential impairment of the Company's significant goodwill and other intangibles; the Company's ability to successfully manage its costs, core business resources and growth, including its ability to successfully manage operational expansions and acquire and integrate new product lines or businesses; the loss of key employees and deterioration of labor and employee relations; the pricing and availability of raw materials; the Company's ability to manage its fixed-price contract exposure; additional liabilities related to taxes; the cost of compliance with environmental, health and safety laws and responding to potential liabilities under these laws; the impact of hurricanes and other severe weather; litigation and disputes involving the Company, including product liability, contract, warranty, pension and severance claims; and long-term risks associated with our indebtedness. For a discussion of these and additional factors that could cause actual results to differ from those described in the forward-looking statements, see the Company's filings with the Securities and Exchange Commission, including Item 1A (Risk Factors) in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008, which should be reviewed carefully. The Company undertakes no obligation to update or revise any forward-looking statement.
Chart is a leading global manufacturer of highly engineered equipment used in the production, storage and end-use of hydrocarbon and industrial gases. The majority of Chart's products are used throughout the liquid gas supply chain for purification, liquefaction, distribution, storage and end-use applications, the largest portion of which are energy-related. Chart has domestic operations located in seven states and an international presence in Australia, China, the Czech Republic, Germany and the United Kingdom. For more information, visit: http://www.chart-ind.com.
As previously announced, the Company will discuss its second quarter 2009 results on a conference call on Thursday, July 30, 2009 at 10:30 a.m. ET. Participants may join the conference call by dialing (888) 241-0558 in the U.S. or (647) 427-3417 from outside the U.S. A live webcast presentation will also be accessible at 10:30 a.m. ET at http://www.chart-ind.com. Please log-in or dial-in five to ten minutes prior to the start time.
A taped replay of the conference call will be archived on the Company's website, www.chart-ind.com, approximately one hour after the call concludes. You may also listen to a taped replay of the conference call by dialing (800) 695-9469 in the U.S. or (402) 220-0618 outside the U.S. and entering Access Code 16217660. The telephone replay will be available beginning approximately one hour after the end of the call until 11:59 p.m. ET, Thursday, August 13, 2009.
For more information, click here: http://www.chart-ind.com/investor_relations.cfm/?b=1444&I=1
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars and shares in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Sales $ 155,301 $ 197,752 $ 335,493 $ 368,081
Cost of sales 99,378 133,752 216,904 252,140
--------- --------- --------- ---------
Gross profit 55,923 64,000 118,589 115,941
Selling, general
and administrative
expenses 23,478 26,342 49,412 49,417
Amortization expense 2,616 2,825 5,267 5,483
Asset impairment charge 500 -- 500 --
--------- --------- --------- ---------
26,594 29,167 55,179 54,900
--------- --------- --------- ---------
Operating income(1)(2) 29,329 34,833 63,410 61,041
Other expense (income):
Interest expense
and financing cost
amortization, net 4,372 4,942 8,618 10,100
Foreign currency
loss (income) (988) (1,460) (307) (1,610)
--------- --------- --------- ---------
3,384 3,482 8,311 8,490
--------- --------- --------- ---------
Income before income
taxes and
noncontrolling
interest 25,945 31,351 55,099 52,551
Income tax expense 8,180 9,192 17,742 15,765
--------- --------- --------- ---------
Income before
noncontrolling
interest 17,765 22,159 37,357 36,786
Noncontrolling
interest, net
of taxes (11) (33) 119 (62)
--------- --------- --------- ---------
Net income $ 17,776 $ 22,192 $ 37,238 $ 36,848
========= ========= ========= =========
Net income per
common share - diluted $ 0.61 $ 0.76 $ 1.29 $ 1.27
Weighted average
number of common
shares outstanding -
diluted 29,014 29,100 28,840 29,029
(1) In addition to the asset impairment charge of $500 for the three
months ended June 30, 2009, additional restructuring costs of $3,619
and $4,097 were included for the three and six months ended June 30,
2009, respectively.
(2) Includes depreciation expense for the three months ended June 30,
2009 and 2008 of $2,653 and $2,473, respectively, and for the six
months ended June 30, 2009 and 2008 of $5,270 and $4,695,
respectively.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net Cash Provided
by Operating
Activities $ 32,526 $ 13,197 $ 58,887 $ 27,224
Investing Activities
Capital expenditures (2,735) (2,682) (5,059) (6,383)
Acquisition of
businesses, net
of cash acquired (5,247) (18,828) (5,247) (18,828)
Other investing
activities -- -- 2,035 (616)
--------- --------- --------- ---------
Net Cash Used In
Investing Activities (7,982) (21,510) (8,271) (25,827)
Financing Activities
Other financing
activities 387 827 387 2,172
--------- --------- --------- ---------
Net Cash Provided
By Financing
Activities 387 827 387 2,172
--------- --------- --------- ---------
Net increase (decrease)
in cash and cash
equivalents 24,931 (7,486) 51,003 3,569
Effect of exchange
rate changes on cash 3,099 784 1,873 4,797
Cash and cash
equivalents at
beginning of period 147,011 107,937 122,165 92,869
--------- --------- --------- ---------
Cash And Cash
Equivalents At End
of Period $ 175,041 $ 101,235 $ 175,041 $ 101,235
========= ========= ========= =========
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30,
2009 Dec. 31,
(Unaudited) 2008
--------- ---------
ASSETS
Cash and cash equivalents $ 175,041 $ 122,165
Short term investments 30,317 32,264
Current assets 203,156 250,596
Property, plant and equipment, net 105,788 102,372
Goodwill 263,744 261,509
Identifiable intangible assets, net 127,405 129,542
Other assets, net 11,406 10,979
--------- ---------
TOTAL ASSETS $ 916,857 $ 909,427
========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities $ 161,651 $ 194,161
Long-term debt 243,175 243,175
Other long-term liabilities 64,467 66,639
Shareholders' equity 447,564 405,452
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 916,857 $ 909,427
========= =========
CHART INDUSTRIES, INC. AND SUBSIDIARIES
OPERATING SEGMENTS (UNAUDITED)
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Sales
Energy & Chemicals $ 70,792 $ 78,197 $ 161,172 $ 152,065
Distribution & Storage 63,316 93,164 132,745 167,508
BioMedical 21,193 26,391 41,576 48,508
--------- --------- --------- ---------
Total $ 155,301 $ 197,752 $ 335,493 $ 368,081
========= ========= ========= =========
Gross Profit
Energy & Chemicals $ 29,367 $ 25,139 $ 64,020 $ 46,541
Distribution & Storage 19,354 28,720 39,339 50,678
BioMedical 7,202 10,141 15,230 18,722
--------- --------- --------- ---------
Total $ 55,923 $ 64,000 $ 118,589 $ 115,941
========= ========= ========= =========
Gross Profit Margin
Energy & Chemicals 41.5% 32.1% 39.7% 30.6%
Distribution & Storage 30.6% 30.8% 29.6% 30.3%
BioMedical 34.0% 38.4% 36.6% 38.6%
Total 36.0% 32.4% 35.3% 31.5%
Operating Income
Energy & Chemicals $ 21,562 $ 18,304 $ 46,605 $ 33,475
Distribution & Storage 10,464 17,628 21,486 30,960
BioMedical 3,355 5,932 7,736 10,466
Corporate (6,052) (7,031) (12,417) (13,860)
--------- --------- --------- ---------
Total $ 29,329 $ 34,833 $ 63,410 $ 61,041
========= ========= ========= =========
CHART INDUSTRIES, INC. AND SUBSIDIARIES
ORDERS AND BACKLOG (UNAUDITED)
(Dollars in thousands)
Three Months Ended
-------------------------------
June 30, March 31, June 30,
2009 2009 2008
--------- --------- ---------
Orders
Energy & Chemicals $ 5,612 $ 17,813 $ 84,989
Distribution & Storage 43,569 52,064 115,422
BioMedical 22,198 19,403 26,656
--------- --------- ---------
Total $ 71,379 $ 89,280 $ 227,067
========= ========= =========
Backlog(1)
Energy & Chemicals $ 128,052 $ 193,276 $ 341,574
Distribution & Storage 89,812 108,319 146,507
BioMedical 6,781 5,951 10,056
--------- --------- ---------
Total $ 224,645 $ 307,546 $ 498,137
========= ========= =========
(1) Includes backlog for Energy World project of $14,500 at June 30,
2009, $21,500 at March 31, 2009 and $66,100 at June 30, 2008