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SMALL BUSINESS
Chart Industries Reports 2009 Third Quarter Results
CLEVELAND, Oct. 29, 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 third quarter ended September 30, 2009. Highlights include:
* First sequential order increase since second quarter 2008 * Adds third strategic acquisition of the year * Cash and short term investments increase to almost $220 million
Net income for the third quarter of 2009 was $8.2 million, or $0.28 per diluted share. This compares with $20.4 million, or $0.70 per diluted share in the comparable period a year ago. The third quarter of 2009 included $1.2 million in restructuring costs, or $0.03 per diluted share, primarily related to planned workforce reductions as part of the Company's previously announced cost reduction initiatives. Net sales for the third quarter of 2009 decreased 33% to $127.2 million from $188.8 million in the comparable period a year ago. Gross profit for the third quarter of 2009 was $39.4 million, or 31.0% of sales, versus $66.2 million, or 35.0% of sales, in the comparable quarter of 2008.
"The strength of our backlog going into the economic downturn, together with our early focus on cost reduction initiatives, has enabled us to weather this storm successfully to date," stated Sam Thomas, Chart's Chairman, President and Chief Executive Officer. "We continue to focus on winning opportunities that will allow us to grow our business at the leading edge of the recovery. Excluding recent acquisitions, our workforce levels are now down by 24% since the end of last year. We continue to strengthen the balance sheet and improve liquidity while strategically adding acquisitions that expand our global footprint."
During the third quarter, the Company announced the acquisition of Covidien's oxygen therapy business, its third strategic acquisition during 2009. This will substantially expand BioMedical's liquid oxygen therapy business including products sold under the leading Companion(TM) and Helios(TM) brands. The acquisition includes these well established brand names as well as design, manufacturing, and sales and service functions worldwide. The acquisition is expected to close by the end of this year.
Backlog at September 30, 2009 was $189.2 million, down 16% from the June 30, 2009 level of $224.6 million. Orders for the third quarter of 2009 were $91.5 million compared with second quarter 2009 orders of $71.4 million.
"Although overall order levels remained relatively weak, I am encouraged to see third quarter orders up sequentially," stated Mr. Thomas. "This is the first such quarterly increase since the second quarter of 2008. Orders have remained relatively constant in our BioMedical business throughout the economic downturn and have stabilized and started to trend up in our Distribution and Storage ("D&S") business, but still remain weak in our Energy and Chemicals ("E&C") business."
"We are optimistic about several potential significant LNG project orders for E&C that are expected in early 2010 and we continue to invest in strategic relationships in this area," Mr. Thomas acknowledged. "In addition to our historic base-load LNG relationships, we have a key alliance agreement with Energy World Corporation ("EWC") for supplying process technology and equipment for their mid-scale LNG liquefaction plants. We are substantially complete on an order to provide equipment for four liquefaction trains that EWC is building in Indonesia and look forward to orders and delivering additional trains. We also entered into an agreement with Toyo Engineering Corporation in 2009 to jointly pursue other mid-scale LNG opportunities."
Selling, general and administrative ("SG&A") expenses for the third quarter of 2009 decreased $6.0 million to $20.8 million, or 16.4% of sales as a result of lower employee related costs, travel and entertainment, and other expenses due to cost reduction initiatives. These savings were partially offset by $0.6 million of restructuring expenses in the quarter. SG&A expenses were 15.1% of sales for the second quarter of 2009, or $23.5 million, and 14.2% of sales, or $26.8 million, for the same quarter a year ago.
Cash and short-term investments were $219.5 million at September 30, 2009, which is $14.1 million higher than balances at June 30, 2009 and $65 million higher than balances at December 31, 2008. Capital expenditures for the third quarter of 2009 increased to $4.0 million from $2.9 million in the same period a year ago primarily due to increased expenditures relating to the previously announced industrial gas equipment repair center being built in Reno, Nevada.
SEGMENT HIGHLIGHTS
E&C segment sales declined 37% to $49.7 million for the third quarter of 2009, compared with $78.9 million for the same quarter in the prior year. E&C gross profit margin declined to 29.1% in the 2009 period compared with 39.2% in the 2008 quarter largely due to project mix, higher costs due to the use of contract labor to complete certain projects, and lower volume as a result of reduced order levels. In addition, performance incentives and change orders were earned on several projects improving margins approximately 2% during the third quarter of 2008.
D&S segment sales declined by 35% to $55.6 million for the third quarter of 2009, compared with $85.0 million for the same quarter in the prior year. The decrease in sales was largely due to lower prices and lower volume in our packaged gas product line and, to a lesser extent, bulk tank products, as industrial gas customers continue to restrict their purchases as a result of the economic downturn. As a result, D&S gross profit margin declined to 28.5% in the quarter compared with 30.9% a year ago.
BioMedical segment sales declined 12% to $21.9 million for the third quarter of 2009, compared with $24.9 million for the same quarter in the prior year. Medical respiratory product sales increased during the quarter, but this was more than offset by lower volume in biological storage system sales due to continued weakness in the beef and dairy artificial insemination market due to the economic downturn. In addition, other product sales declined due to the impact of the previously announced Denver facility shutdown. BioMedical gross profit margin increased to 41.4% in the quarter compared with 36.1% for the same period in 2008. This was primarily due to lower material costs and improved volume in medical respiratory products.
OUTLOOK
Based on year to date results, current expectations and our cost reduction initiatives, the Company is reaffirming its previously announced full year sales, but revising upward its mid-point earnings per share guidance. Sales for 2009 are still expected to remain in the range of $580 to $620 million. Earnings are now expected to be in a range of $1.60 to $1.70 per share, as compared with the Company's prior guidance of $1.50 to $1.70 per share, on approximately 29.0 million weighted average shares outstanding. This revised guidance includes the impact from restructuring charges of approximately $0.14 per share through September 30, 2009, and $0.01 per share of expected additional charges in the fourth quarter 2009 related to cost reduction initiatives and the previously announced shutdown of the Denver facility.
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, including the extent of decline in future sales and earnings related to these events; 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; changes in government healthcare regulations and reimbursement policies; 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 satisfaction of customary conditions to closing pending acquisitions; the loss of key employees, labor costs and disputes, and deterioration of 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; volatility and fluctuations in the price of the Company's stock; and 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 throughout the United States and an international presence in Asia, Australia and Europe. For more information, visit: http://www.chart-ind.com.
As previously announced, the Company will discuss its third quarter 2009 results on a conference call on Thursday, October 29, 2009 at 10:30 a.m. ET. Participants may join the conference call by dialing (877) 485-3104 in the U.S. or (201) 689-8579 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 (877) 660-6853 in the U.S. or (201) 612-7415 outside the U.S. and entering Account Code 356 and Replay ID 334955. The telephone replay will be available beginning approximately one hour after the end of the call until 11:59 p.m. ET, Thursday, November 12, 2009.
For more information, click here: http://www.chart-ind.com/investor_relations.cfm/?b=1444&l=1
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars and shares in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Sales $ 127,172 $ 188,808 $ 462,665 $ 556,889
Cost of sales 87,798 122,644 304,702 374,785
--------- --------- --------- ---------
Gross profit 39,374 66,164 157,963 182,104
Selling, general and
administrative expenses 20,831 26,759 70,242 76,175
Amortization expense 2,745 2,751 8,012 8,234
Asset impairment (166) -- 334 --
--------- --------- --------- ---------
23,410 29,510 78,588 84,409
--------- --------- --------- ---------
Operating income (1) (2) 15,964 36,654 79,375 97,695
Other expense (income):
Interest expense and
financing cost
amortization, net 4,352 5,249 12,970 15,349
Foreign currency
loss (income) (128) 2,053 (435) 443
--------- --------- --------- ---------
4,224 7,302 12,535 15,792
--------- --------- --------- ---------
Income before income
taxes and
noncontrolling interest 11,740 29,352 66,840 81,903
Income tax expense 3,513 8,806 21,255 24,571
--------- --------- --------- ---------
Income before
noncontrolling interest 8,227 20,546 45,585 57,332
Noncontrolling interest,
net of taxes (21) 144 98 82
--------- --------- --------- ---------
Net income $ 8,248 $ 20,402 $ 45,487 $ 57,250
========= ========= ========= =========
Net income per common
share - diluted $ 0.28 $ 0.70 $ 1.57 $ 1.97
Weighted average number
of common shares
outstanding - diluted 29,105 29,147 28,932 29,072
(1) In addition to an asset impairment charge of $334 for the nine
months ended September 30, 2009, additional restructuring costs of
$1,222 and $5,781 were included for the three and nine months ended
September 30, 2009, respectively
(2) Includes depreciation expense for the three months ended September
30, 2009 and 2008 of $2,654 and $2,917, respectively, and for the nine
months ended September 30, 2009 and 2008 of $7,925 and $7,612,
respectively
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net Cash Provided by
Operating Activities $ 17,695 $ 59,609 $ 76,582 $ 86,833
Investing Activities
Capital expenditures (4,035) (2,906) (9,094) (9,289)
Acquisition of
businesses, net of
cash acquired (2,810) -- (8,057) (18,828)
Other investing
activities 39 -- 2,074 (616)
--------- --------- --------- ---------
Net Cash Used In Investing
Activities (6,806) (2,906) (15,077) (28,733)
Financing Activities
Principal payments on
long-term debt -- (6,825) -- (6,825)
Other financing
activities 466 524 853 2,696
--------- --------- --------- ---------
Net Cash Provided By
(Used In) Financing
Activities 466 (6,301) 853 (4,129)
--------- --------- --------- ---------
Net increase in cash
and cash equivalents 11,355 50,402 62,358 53,971
Effect of exchange rate
changes on cash 2,771 (2,753) 4,644 2,044
Cash and cash equivalents
at beginning of period 175,041 101,235 122,165 92,869
--------- --------- --------- ---------
Cash And Cash Equivalents
At End of Period $ 189,167 $ 148,884 $ 189,167 $ 148,884
========= ========= ========= =========
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30,
2009 December 31,
(Unaudited) 2008
------------ ------------
ASSETS
Cash and cash equivalents $ 189,167 $ 122,165
Short term investments 30,317 32,264
Current assets 189,520 250,596
Property, plant and equipment, net 105,400 102,372
Goodwill 264,848 261,509
Identifiable intangible assets, net 124,402 129,542
Other assets, net 11,442 10,979
------------ ------------
TOTAL ASSETS $ 915,096 $ 909,427
============ ============
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities $ 145,363 $ 194,161
Long-term debt 243,175 243,175
Other long-term liabilities 63,555 66,639
Shareholders' equity 463,003 405,452
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 915,096 $ 909,427
============ ============
CHART INDUSTRIES, INC. AND SUBSIDIARIES
OPERATING SEGMENTS (UNAUDITED)
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Sales
Energy & Chemicals $ 49,689 $ 78,912 $ 210,861 $ 230,976
Distribution & Storage 55,561 84,950 188,306 252,459
BioMedical 21,922 24,946 63,498 73,454
--------- --------- --------- ---------
Total $ 127,172 $ 188,808 $ 462,665 $ 556,889
========= ========= ========= =========
Gross Profit
Energy & Chemicals $ 14,460 $ 30,926 $ 78,480 $ 77,466
Distribution & Storage 15,843 26,239 55,182 76,916
BioMedical 9,071 8,999 24,301 27,722
--------- --------- --------- ---------
Total $ 39,374 $ 66,164 $ 157,963 $ 182,104
========= ========= ========= =========
Gross Profit Margin
Energy & Chemicals 29.1% 39.2% 37.2% 33.5%
Distribution & Storage 28.5% 30.9% 29.3% 30.5%
BioMedical 41.4% 36.1% 38.3% 37.7%
Total 31.0% 35.0% 34.1% 32.7%
Operating Income
Energy & Chemicals $ 7,527 $ 23,800 $ 54,132 $ 57,276
Distribution & Storage 8,523 16,494 30,009 47,453
BioMedical 5,664 4,630 13,400 15,096
Corporate (5,750) (8,270) (18,166) (22,130)
--------- --------- --------- ---------
Total $ 15,964 $ 36,654 $ 79,375 $ 97,695
========= ========= ========= =========
CHART INDUSTRIES, INC. AND SUBSIDIARIES
ORDERS AND BACKLOG (UNAUDITED)
(Dollars in thousands)
Three Months Ended
-------------------------------
Sept.30, June 30, March 31,
2009 2009 2009
--------- --------- ---------
Orders
Energy & Chemicals $ 18,782 $ 5,612 $ 17,813
Distribution & Storage 51,722 43,569 52,064
BioMedical 20,994 22,198 19,403
-------- --------- ---------
Total $ 91,498 $ 71,379 $ 89,280
========= ========= =========
Backlog (1)
Energy & Chemicals $ 97,234 $ 128,052 $ 193,276
Distribution & Storage 86,221 89,812 108,319
BioMedical 5,719 6,781 5,951
-------- --------- ---------
Total $ 189,174 $ 224,645 $ 307,546
========= ========= =========
(1) Includes backlog for the Energy World project of $10,600 at
September 30, 2009, $14,500 at June 30, 2009 and $21,500 at March 31,
2009.
CONTACT: Chart Industries, Inc.
Michael F. Biehl, Executive Vice President and
Chief Financial Officer
216-626-1216
michael.biehl@chart-ind.com