Chart Industries, Inc. ((GTLS)) has held its Q4 earnings call. Read on for the main highlights of the call.
Chart Industries, Inc. recently held its earnings call, revealing a generally positive sentiment despite some challenges. The company reported strong cash flow, significant order growth, and record adjusted EBITDA and operating margins. However, it also faced challenges in the Cryo Tank Solutions segment and foreign exchange headwinds. Overall, the highlights significantly outweighed the lowlights, painting an optimistic picture for the company.
Strong Cash Flow and Leverage Reduction
Chart Industries generated $281.5 million of net cash from operating activities in Q4 2024, with a free cash flow of $261 million. This contributed to a full-year free cash flow of $388 million. The company achieved a year-end 2024 net leverage ratio of 2.8, making progress towards its target of 2 to 2.5.
Significant Order Growth
The company reported Q4 2024 orders of $1.55 billion, marking a 29.4% increase from the previous year. This contributed to full-year orders of $5 billion, representing a 13% increase compared to 2023.
Record Adjusted EBITDA and Operating Margin
Chart Industries achieved a Q4 2024 adjusted EBITDA of $283.6 million, contributing to a full-year adjusted EBITDA of $1.014 billion. The EBITDA margin was 24.4%, a year-over-year increase of 330 basis points. The adjusted operating margin for the full year 2024 was 21.1%, up 400 basis points.
Robust End Market Diversification
In 2024, Chart Industries expanded its customer base by selling to 267 new customers and achieved record hydrogen sales in Europe. The commercial pipeline of opportunities not yet in backlog is approximately $24 billion, with $2 billion in customer commitments.
Strong Space Exploration Orders
Q4 2024 saw $28.4 million in space exploration orders, the highest quarterly total for the year. Orders for Q1 2025 have already reached approximately $60 million, indicating strong momentum in this sector.
Challenges in Cryo Tank Solutions (CTS)
The CTS segment faced challenges, with Q4 2024 orders decreasing by 11.9% compared to Q4 2023, primarily due to softer European industrial gas demand. CTS sales decreased by 26.4% due to specific project sales in Q4 2023 that did not repeat.
Foreign Exchange Headwinds
Chart Industries faced a $17 million headwind from foreign exchange in sales during Q4 2024, along with a $0.33 headwind to adjusted diluted EPS due to foreign exchange, tax rate delta, share count changes, and interest expense.
Specialty Products Margin Pressure
The specialty products segment experienced margin pressure, with a Q4 2024 gross profit margin decrease of 120 basis points compared to Q4 2023. This was affected by third-party expenses and inefficiencies at the Theodore, Alabama facility.
Forward-Looking Guidance
CEO Jill Evanko provided detailed financial guidance, highlighting expectations for further growth in 2025. The company anticipates a backlog conversion supporting its guidance range, despite potential foreign exchange headwinds. Chart Industries aims to continue its positive trajectory with strong cash flow and order growth.
In summary, Chart Industries, Inc. presented a positive outlook during its earnings call, with strong cash flow, significant order growth, and record margins. While challenges in the CTS segment and foreign exchange headwinds were noted, the company’s forward-looking guidance suggests continued growth and resilience in the face of these obstacles.