CLEVELAND, Feb. 25, 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 fourth quarter and year ended December 31, 2008. Highlights include:
* 2008 sales up 12% to $744.4 million * 2008 net income up 79% to $78.9 million, or $2.72 per diluted share * Cash and short term investments total $154.4 million
Net sales for the fourth quarter of 2008 increased 3% to $187.5 million from $182.7 million in the comparable period a year ago. For the year, net sales rose 12% to $744.4 million from $666.4 million in 2007. Net income for the fourth quarter of 2008 was $21.7 million, or $0.75 per diluted share, an increase of 32% compared with $16.4 million, or $0.57 per diluted share, in the fourth quarter of 2007. For the year, net income was $78.9 million, or $2.72 per diluted share, compared with net income of $44.2 million, or $1.61 per diluted share, in 2007.
The fourth quarter of 2008 included several unusual items that favorably impacted net income by $3.1 million, or $0.11 per diluted share. These items included the reversal of certain contingent liabilities that were established in 2003, partially offset by customer settlements related to completed projects and facility shutdown costs incurred in our Energy & Chemicals ("E&C") business. The customer settlements included disputed costs on a prior year installation project not covered by insurance.
"2008 was an excellent year across all business segments in terms of operating performance and free cash flow generation, particularly in our E&C business, as improved project execution and mix drove margin enhancement, which resulted in record sales and profit performance," stated Sam Thomas, Chart's Chairman, President and Chief Executive Officer. "I am particularly pleased with our ability to weather unprecedented raw material price volatility and unfavorable currency exchange rates over the course of 2008. Chart's flexible cost structure and aggressive cost containment actions enabled our strong fourth quarter operating performance despite the downturn in order intake and sales growth."
Backlog at December 31, 2008 was $398.8 million, down 16% from the December 31, 2007 level of $475.3 million, and 14% lower than the backlog of $461.8 million at September 30, 2008. Orders for the fourth quarter of 2008 were $126.9 million compared with third quarter 2008 orders of $163.8 million.
"Orders slowed in the fourth quarter as tight credit availability, falling commodity prices, and diminishing global industrial and capital project activity all affected our Distribution & Storage ("D&S") and E&C businesses," Mr. Thomas continued. "BioMedical orders, which have historically been less cyclical than our other businesses, held up nicely."
Selling, general and administrative ("SG&A") expenses for the fourth quarter of 2008 were $24.6 million, or 13.1% of sales, compared with $23.7 million, or 13.0% of sales, for the same quarter a year ago. The slight increase in SG&A expenses was primarily the result of increased bad debt reserves due to customer operating difficulties related to the current market environment.
Income tax expense was $5.9 million for the fourth quarter and represented an effective tax rate of 21.4% compared with $5.0 million for the prior quarter, which represented an effective tax rate of 23.3%. The full year effective tax rate for 2008 was 27.8% compared with 28.2% for 2007. The decline in the fourth quarter effective tax rate was primarily due to a permanent tax difference on the reversal of the contingent liabilities, partially offset by an increase in the mix of domestic versus foreign earnings.
Cash, including short term investments, was $154.4 million at December 31, 2008, which is 66% greater than balances at December 31, 2007. Net debt at December 31, 2008 was $88.7 million.
SEGMENT HIGHLIGHTS
E&C segment sales declined by 4% to $81.5 million for the fourth quarter of 2008, compared with $84.9 million for the same quarter in the prior year. E&C gross profit margin increased to 31.4% in the 2008 period compared with 27.3% in the 2007 quarter primarily due to favorable project mix and improved execution. The fourth quarter sales decline reflects the weakness experienced in order entry rates that began late in the third quarter and accelerated as the fourth quarter progressed as a result of the economic crisis. Our Air Cooled Heat Exchanger business was a notable exception for the quarter, as continued demand from the U.S. domestic natural gas market as well as new applications related to improved energy efficiency for the power industry drove strong order intake coupled with improved operating performance.
D&S segment sales increased by 13% to $83.5 million for the fourth quarter of 2008, compared to $74.1 million for the same quarter in the prior year. The increase in sales reflects improved volume in bulk tanks and the benefits from a small acquisition in Germany made in the second quarter of 2008. D&S gross profit margin of 29.3% in the quarter was slightly higher than its margin of 28.6% a year ago. While packaged gas and standard bulk tanks saw diminished orders over the past quarter, engineered tank orders were robust, particularly at our Czech Republic operations.
BioMedical segment sales declined by 5% to $22.5 million for the fourth quarter of 2008, compared with $23.7 million for the same quarter in the prior year. Lower volume in both medical respiratory and biological storage system sales contributed to the decline. BioMedical gross profit margin declined to 32.2% in the quarter compared with 36.7% for the same period in 2007. This was primarily due to lower volume, product mix, and unfavorable currency impact from euro-denominated sales compared to an unusually strong fourth quarter in 2007.
OUTLOOK
"Reflecting the economic crisis, order rates for our E&C and D&S businesses slowed significantly in the fourth quarter," stated Mr. Thomas. "While the majority of new E&C projects in development continue to move forward even at today's lower oil and natural gas prices, project timing has been delayed due to lack of financing or reduced energy and industrial production forecast growth rates. We expect that the difficult economic conditions will persist in 2009. Consequently, we have taken, and will continue to take, cost reduction actions to appropriately align our cost structure with expected market conditions."
"Although our backlog provides good visibility for the first half of 2009, the uncertain economic conditions challenge our ability to forecast the second half of 2009. Based on our current backlog, order expectations, and cost reduction initiatives, 2009 net sales are expected in a range of $600 to $660 million. Diluted earnings per share are anticipated to be in a range of $1.15 to $1.65 per share based on approximately 29.0 million weighted average shares outstanding."
"It is very difficult to predict sales and earnings levels in the current market environment. We have provided a wide range in our guidance, given that it is early in the year," further stated Mr. Thomas. "However, if the current customer destocking that we have experienced over the past four months slows, orders resume to more modest levels, and some capital spending in the energy industry resumes as many of our largest customers have forecast, we expect to be in the mid- to upper range of our guidance."
Mr. Thomas continued, "Our strong balance sheet, significant liquidity, ongoing cost reduction initiatives and flexible cost structure should enable us to maximize our margins and continue to generate strong free cash flow as we address the uncertainty of customer activity levels in 2009 and beyond. Our management team has managed through difficult business cycles before, and we enter this one in a strong financial and competitive position. I am confident we will come through it even stronger and more successful with new opportunities to resume a strong growth path."
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 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," "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; 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 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 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 eight 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 fourth quarter and full year 2008 results on a conference call on Wednesday February 25, 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 (888) 567-0361 in the U.S. or (402) 220-2477 outside the U.S. and entering Access Code 82999633. The telephone replay will be available beginning approximately one hour after the end of the call until 11:59 p.m. ET, February 28, 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
(Dollars and shares in thousands, except per share amounts)
Three Months Ended
December 31, Year Ended
(Unaudited) December 31,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Sales $ 187,474 $ 182,675 $ 744,363 $ 666,395
Cost of sales 130,190 129,641 504,975 476,854
--------- --------- --------- ---------
Gross profit 57,284 53,034 239,388 189,541
Selling, general and
administrative expenses(1) 24,648 23,683 100,847 92,650
Amortization expense 2,729 2,647 10,963 10,951
Reversal of contingent
liabilities (6,514) -- (6,514) --
Other operating costs 763 (27) 739 759
--------- --------- --------- ---------
21,626 26,303 106,035 104,360
--------- --------- --------- ---------
Operating income (2)(3) 35,658 26,731 133,353 85,181
Other (income) expense:
Interest expense, net 4,058 4,765 17,953 22,174
Financing costs
amortization 403 413 1,857 1,646
Other (income) expense 3,505 263 3,948 42
--------- --------- --------- ---------
7,966 5,441 23,758 23,862
--------- --------- --------- ---------
Income before income
taxes and minority
interest 27,692 21,290 109,595 61,319
Income tax expense 5,918 4,951 30,489 17,319
--------- --------- --------- ---------
Income before minority
interest 21,774 16,339 79,106 44,000
Minority interest, net
of taxes 100 (79) 182 (156)
--------- --------- --------- ---------
Net income $ 21,674 $ 16,418 $ 78,924 $ 44,156
========= ========= ========= =========
Net income per common
share - basic $ 0.76 $ 0.58 $ 2.78 $ 1.64
Net income per common
share -diluted $ 0.75 $ 0.57 $ 2.72 $ 1.61
Weighted average number
of common shares
outstanding - basic 28,408 28,087 28,354 26,872
Weighted average number
of common shares
outstanding - diluted 28,810 28,909 29,008 27,493
(1) The year ended December 31, 2007 includes $7,863 of stock-based
compensation expense primarily related to the vesting of
performance-based options and other expenses incurred in conjunction
with the Company's secondary stock offering in June 2007.
(2) The three months ended December 31, 2008 includes $4,906 of
unusual costs for customer settlements and facility shutdown costs
in our Energy & Chemicals segment.
(3) Includes depreciation expense of $2,685 and $2,389 for the three
months ended December 31, 2008 and 2007, respectively, and $10,349 and
$7,755 for the years ended December 31, 2008 and 2007, respectively.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Ended
December 31, Year Ended
(Unaudited) December 31,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net Cash Provided by
Operating Activities $ 10,979 $ 28,349 $ 97,812 $ 82,507
Investing Activities
Capital expenditures (4,679) (3,453) (13,968) (19,028)
Short term investments (32,264) -- (32,264) --
Proceeds from sales
of assets -- 2,099 -- 2,099
Acquisition of business -- -- (18,828) --
Other investing
activities -- -- (616) (1,612)
--------- --------- --------- ---------
Net Cash Used In
Investing Activities (36,943) (1,354) (65,676) (18,541)
Financing Activities
Net borrowings (payments)
on revolving credit
facility or short-term
debt -- -- -- (750)
Principal payments
on debt -- -- (6,825) (40,000)
Stock offering, and
warrant and option
exercise proceeds -- 1,257 1,329 43,089
Other financing
activities 68 1,369 1,435 5,105
--------- --------- --------- ---------
Net Cash Provided By
Financing Activities 68 2,626 (4,061) 7,444
--------- --------- --------- ---------
Net increase (decrease)
in cash and cash
equivalents (25,896) 29,621 28,075 71,410
Effect of exchange rate
changes on cash (823) 822 1,221 2,605
Cash and cash equivalents
at beginning of period 148,884 62,426 92,869 18,854
--------- --------- --------- ---------
Cash And Cash Equivalents
At End of Period $ 122,165 $ 92,869 $ 122,165 $ 92,869
========= ========= ========= =========
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31,
--------------------
2008 2007
--------- ---------
ASSETS
Cash and cash equivalents $ 122,165 $ 92,869
Short term investments 32,264 --
Other current assets 250,596 236,178
Property, plant and equipment, net 102,372 99,579
Goodwill 261,509 248,453
Identifiable intangible assets, net 129,542 135,699
Other assets, net 10,979 12,976
--------- ---------
TOTAL ASSETS $ 909,427 $ 825,754
========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities $ 194,161 $ 174,694
Long-term debt 243,175 250,000
Other long-term liabilities 68,131 73,069
Shareholders' Equity 403,960 327,991
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 909,427 $ 825,754
========= =========
CHART INDUSTRIES, INC. AND SUBSIDIARIES
OPERATING SEGMENTS (UNAUDITED)
(Dollars in thousands)
Three Months Ended Year Ended
December 31, December 31,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Sales
Energy & Chemicals $ 81,526 $ 84,907 $ 312,502 $ 253,672
Distribution & Storage 83,457 74,118 335,916 322,565
BioMedical 22,491 23,650 95,945 90,158
--------- --------- --------- ---------
Total $ 187,474 $ 182,675 $ 744,363 $ 666,395
========= ========= ========= =========
Gross Profit
Energy & Chemicals $ 25,618 $ 23,171 $ 103,085 $ 58,102
Distribution & Storage 24,424 21,176 101,340 100,673
BioMedical 7,242 8,687 34,963 30,766
--------- --------- --------- ---------
Total $ 57,284 $ 53,034 $ 239,388 $ 189,541
========= ========= ========= =========
Gross Profit Margin
Energy & Chemicals 31.4% 27.3% 33.0% 22.9%
Distribution & Storage 29.3% 28.6% 30.2% 31.2%
BioMedical 32.2% 36.7% 36.4% 34.1%
Total 30.6% 29.0% 32.2% 28.4%
Operating Income
Energy & Chemicals (1) $ 13,476 $ 16,561 $ 70,752 $ 33,821
Distribution & Storage 16,317 12,350 63,770 66,167
BioMedical 5,646 5,067 20,742 17,788
Corporate (2) (3) 219 (7,247) (21,911) (32,595)
--------- --------- --------- ---------
Total $ 35,658 $ 26,731 $ 133,353 $ 85,181
========= ========= ========= =========
(1) The three months and year ended December 31, 2008 includes $4,906
of unusual costs for customer settlements and facility shutdown costs
in our Energy & Chemicals segment.
(2) The Corporate operating results for the three months and year
ended December 31, 2008 includes ($6,514) for the reversal of certain
contingent liabilities.
(3) The Corporate operating results for the year ended December 31,
2007 includes $7,863 of stock-based compensation expense primarily
related to the vesting of performance-based options and other
expenses incurred in conjunction with the Company's secondary stock
offering in June 2007.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
ORDERS AND BACKLOG (UNAUDITED)
(Dollars in thousands)
Three Months Ended Year Ended
-------------------- December 31,
Dec. 31, Sept. 30, --------------------
2008 2008 2008 2007
--------- --------- --------- ---------
Orders
Energy & Chemicals (1) $ 38,510 $ 46,264 $ 220,833 $ 408,020
Distribution & Storage 67,268 93,817 367,556 324,698
BioMedical 21,106 23,706 94,214 94,045
--------- --------- --------- ---------
Total $ 126,884 $ 163,787 $ 682,603 $ 826,763
========= ========= ========= =========
Backlog
Energy & Chemicals $ 265,900 $ 308,891 $ 265,900 $ 358,784
Distribution & Storage 125,929 144,248 125,929 107,011
BioMedical 7,013 8,631 7,013 9,483
--------- --------- --------- ---------
Total $ 398,842 $ 461,770 $ 398,842 $ 475,278
========= ========= ========= =========
(1) The 2007 orders for the Energy & Chemicals segment include an
order in excess of $130.0 million from Energy World Corporation for
four LNG liquefaction trains.