ATLANTA, April 18, 2019 (GLOBE NEWSWIRE) -- Chart Industries, Inc. (NASDAQ: GTLS), a leading diversified global manufacturer of highly engineered equipment for the industrial gas and energy industries, today reported results for the first quarter ended March 31, 2019. Further details can be found in the supplemental presentation included with this release. Highlights since year-end include:

• Booked $135 million equipment order for Venture Global’s Calcasieu Pass LNG export terminal project and a $20 million order for Golar’s floating LNG Gimi project in Q1 2019. Won a $30 million order for another big LNG project this week (Q2 2019).
• Finalized long term agreements with two key LNG fueling system customers for over the road trucking applications, and a Memorandum of Understanding (“MOU”) with the Indian Oil Corporation Ltd. (“IOCL”) to develop LNG infrastructure for transport, storage and liquefaction in India.
• First quarter 2019 orders of $461.2 million increased 60% over the first quarter of 2018 (51% organically) reflecting an expected ramp in big LNG order activity, and continued strength in all three segments’ base businesses.
• Took restructuring actions that will result in anticipated additional annual operating income of $6.5 million, furthering our year to date margin expansion execution beyond pricing and sourcing.
• Reported EPS of $0.03 versus $0.13 in the first quarter of 2018. Adjusted EPS of $0.39, a 117% increase over the first quarter of 2018 adjusted EPS of $0.18.
• Announced Chart Investor Day on November 14, 2019 in La Crosse, Wisconsin.
• Increased 2019 revenue and adjusted EPS guidance. 2019 full year revenue guidance is $1.29 billion to $1.34 billion and adjusted EPS guidance is $2.70 to $3.05 (inclusive of 2019 portion of Calcasieu Pass and Golar Gimi projects).
• Increased 2019 big LNG order pipeline expectations to $600 million to $800 million from $400 million to $500 million.

In the first quarter 2019, we continued to see order strength across the end markets in Energy & Chemicals (“E&C”) and Distribution & Storage (“D&S”), building upon our unique position as an industrial manufacturing company with a complementary energy presence that serves the liquefaction, storage and transport of LNG and industrial gas infrastructure. Orders of $461.2 million increased 60% (51.2% organically) over the first quarter of 2018 and 69% over the fourth quarter of 2018. First quarter 2019 orders included a $135.5 million equipment order for Venture Global’s Calcasieu Pass 10 million ton per annum (“MTPA”) LNG export terminal, and a $20.3 million order for E&C equipment for Golar’s Gimi floating LNG vessel for which we received full notice to proceed on April 16, 2019. Additionally, we were notified this week that we won an order for $30 million related to air cooled heat exchangers for another big LNG project with Bechtel as the EPC. Our “big LNG” order pipeline continues to take shape, with increasing order potential in 2019, driven by positive trends in the first quarter from the Federal Energy Regulatory Commission (“FERC”) and several LNG export terminal operators moving toward Final Investment Decisions (“FID”). These actions contribute to our increasingly strong pipeline of potential 2019 large LNG related orders of $600 million to $800 million, up from our prior view of $400 to $500 million.

Additionally, President Trump’s recently signed executive orders to speed up oil and gas projects included requiring the Federal Railroad Administration (“FRA”) to alter existing regulations to allow the shipment of liquefied natural gas by rail. Not only do these executive orders benefit existing aspects of our business, but their continued implementation would further support our small-scale LNG (“ssLNG”) efforts. Shipment of LNG by rail in the United States has been a topic for many years, and we are prepared to move quickly to take advantage of such a regulatory change. Specifically, we have equipment immediately available for this application which would be sold under our trademarked “GBR™ (Gas By Rail)” brand.

In the E&C segment, orders of $263.9 million increased 182% (168% organically) over the first quarter of 2018, and 204% over the fourth quarter of 2018, bringing E&C backlog to $410.5 million, the highest since the second quarter of 2012. In addition to the Calcasieu Pass order and the Gimi order, E&C received multiple orders in the quarter for air cooled heat exchangers, an equipment order for $9 million for SABIC’s Saudi Arabian petrochemical plant, a $7 million order for a large customer’s Gulf Coast fractionation train, and an additional $7 million order for equipment for a natural gas processing plant booked in March. This week (Q2 2019) we booked a $9.3 million order for an air separation application.

Distribution & Storage Western Hemisphere (“D&S West”) orders of $114.1 million were down 12.6% from the first quarter of 2018, which was the highest order quarter in the history of the D&S West business, yet continued to be strong; by way of comparison, the average order level for the past 8 quarters was $112 million for D&S West. The segment signed multiple significant long-term agreements in the first quarter. We are excited to announce that in the quarter we completed sole source long term agreements with two of our key over the road trucking customers. Both agreements are multiple year with double-digit growth anticipated in each year. Sales for over the road trucking LNG fueling systems continues to increase, with sales of $17.7 million during the first quarter, up 68% from the first quarter of 2018, and a 63% increase over the fourth quarter of 2018. Additionally, in the first quarter, we signed a master set of terms and conditions with one of our key industrial gas customers to govern our global activity, and extended another industrial gas customer for two additional years.

Lastly, we continue to innovate for our customers, including developing new solutions for our specialty markets. During the first quarter, we received our first order totaling $850 thousand for a liquid hydrogen vehicle fueling station for passenger cars in California. This is a new focus area for us, and we are optimistic about our participation in California’s goal to have 200 stations complete by 2025. To continue to build upon our specialty market base, we are underway with the development of the CO2 Trifecta, a new product which will launch in the second half of 2019, to serve an unmet need from the cannabis customer base. The Trifecta will be able to deliver a continuous flow of CO2 in either liquid or gaseous form at pressures up to 850 psi offering our customers a low maintenance solution to add significant capacity.

Distribution & Storage Eastern Hemisphere (“D&S East”) orders of $83.2 million included $12.7 million from VRV, and increased 19.5% (15.8% organically) over the fourth quarter of 2018, and 30.2% (10.3% organically) over the first quarter of 2018. Further building upon the synergies from the VRV acquisition, we signed a MOU with Indian Oil Corporation Ltd., agreeing to work together to build the LNG market in India and taking advantage of the demand growth for natural gas in the region. Capitalizing on the VRV acquisition we are already bidding on $11.5 million of LNG and industrial gas related projects in India, and booked $3.9 million in orders in the first quarter for D&S East products including tanks, trailers, microbulk and vaporizers.

Strength in LNG systems, trailers and packaged gas continues in the D&S East markets. With the regulatory suspension of tolls for natural gas trucks in 2019 and 2020 in Germany, there is visible strong interest in our quoting pipeline throughout Europe. Specifically, we received our first order for the first LNG fueling station from a customer in Germany in the beginning of April, and there are 16 additional stations planned in Germany between now and the end of 2020.

First quarter order activity resulted in total backlog of $733.8 million, 53.9% higher than the first quarter of 2018 and 29.1% higher than the fourth quarter of 2018. The last time backlog was at this level was the third quarter of 2014. The higher than typical first quarter orders also contributed to sales of $289.3 million, an 18.5% (9.5% organic) increase over the first quarter of 2018, and only a 0.3% (3.2% organic) decline from the strong fourth quarter of 2018. This is better than our typical order seasonality. For example, the past three years sequential sales declined from the fourth quarter to the first quarter (declines of 26% (Q4 2015 to Q1 2016), 6% (Q4 2016 to Q1 2017), and 9.4% (Q4 2017 to Q1 2018)).

“With increasing activity related to big LNG and continued order strength across the base business, we are at near record backlog levels,” said Jill Evanko, Chart’s President and CEO. “As a result of the combination of these new orders, our first quarter results in line with our expectations, and our self-help margin expansion actions, we have increased our sales and adjusted earnings per share full year 2019 guidance.”

While SG&A as a percent of sales declined in 2018 from 2017 by over 500 basis points, and continues at previously guided levels, we will continue to execute on margin expansion opportunities. In the first quarter, we continued to progress on our sourcing cost reduction activities, yielding already executed annual savings results of $4 million. In addition to previously announced 80/20 initiatives, we took further restructuring actions in the first quarter of 2019 which will result in incremental annualized savings of $6.5 million ($4.3 million in cost of goods sold and $2.2 million in SG&A), and an anticipated positive impact of $3.6 million on 2019 results. The cost of the first quarter actions totaled $7.4 million, split between SG&A costs of $1.9 million and cost of goods sold of $5.5 million. The first quarter actions included facility consolidation announcements, geographic strategic manufacturing movements, streamlining how we sell our LifeCycle services, and reducing outside provider costs.

The restructuring actions negatively impacted the first quarter gross margin as a percent of sales, which was 23.2%. Adjusted for one-time costs in the first quarter 2019 in cost of goods sold, the gross margin as a percent of sales would have been 26.4%. This compares to actual gross margin as a percent of sales in the fourth quarter of 2018 of 25.5%, which would have been 26.1% excluding one-time costs. We expect the benefits of our restructuring actions and the sourcing and pricing impacts to improve gross margin as a percent of sales immediately beginning in April and continuing throughout the year.

The first full quarter of VRV was in line with our expectations of orders ($25.5 million), revenue and cost synergy work. The combination of the businesses has yielded additional market opportunities such as India and cross selling synergies in both E&C and D&S East. We have identified a significant synergy where we will utilize VRV’s integrated solution of scrubber columns and internal vessels to replace purchased components in one of the big LNG projects that is included in our expected 2019 order pipeline. As anticipated, the VRV first quarter of 2019 was at an operating margin loss as we move low margin backlog out to be replaced by higher margin work, and the teams execute on identified cost synergies. The cost synergies include but are not limited to production floor layouts, facility and product rationalization and overlapping back office costs. We anticipate the synergies to begin to be reflected in the second half of 2019.

Net income for the first quarter of 2019 of $0.9 million resulted in reported earnings per share (“EPS”) of $0.03, inclusive of $8.9 million of restructuring and transaction related cost ($0.23 of EPS), $3.9 million of VRV associated integration and step up costs ($0.09 of EPS), and $1 million dollars of other one-time costs ($0.04 of EPS) primarily related to one-time expenses during the quarter from the Tax Cuts and Jobs Act and dilution from the convertible notes. Adjusted EPS of $0.39 is more than double the first quarter of 2018 adjusted EPS of $0.18.

“We are ramped up to begin the manufacturing for the big LNG project orders announced, as well as others in the pipeline. We look forward to sharing our facility and team at our Investor Day on November 14, 2019 in La Crosse, Wisconsin,” concluded Jill Evanko.

OUTLOOK

Our full year 2019 guidance assumes LNG project revenue in 2019 from Calcasieu and Golar Gimi of $28 million to $30 million, which is subject to project timing. Our guidance does not include the additional 2019 revenue or earnings per share from the $30 million order we won this week, as we are working with Bechtel on project timing. Sales, inclusive of the Calcasieu Pass and Gimi projects, are expected to be in the range of $1.29 billion to $1.34 billion for the full year of 2019. This is an increase compared to prior 2019 guidance of $1.26 billion to $1.31 billion. We expect full year adjusted earnings per diluted share to be in the range of $2.70 to $3.05 per share, on approximately 32.5 million weighted average shares outstanding, an increase from our prior guidance of $2.50 to $2.85 per share. This excludes any restructuring costs and transaction-related costs, and as such is a non-GAAP measure. We expect our effective tax rate to be approximately 22% to 23%. Our capital expenditures for 2019 are expected to be in the range of $35 million to $40 million, which includes the build out of an LNG fuel systems production line in Europe. Our weighted average shares projection excludes any potential future dilution impact associated with our convertible notes.

Chart is a leading diversified global manufacturer of highly engineered equipment for the industrial gas, energy, and biomedical industries. The majority of Chart's products are used throughout the liquid gas supply chain for purification, liquefaction, distribution, storage and end-use applications, a large portion of which are energy-related. Chart has domestic operations located across the United States and an international presence in Asia, Australia, Europe and the Americas. For more information, visit: http://www.chartindustries.com.