Graphics industries (GTLS 6.79%)a leader in the manufacturing of cryogenic equipment, released its third quarter financial results on November 1. Highlights of the report included an 18.3% year-over-year increase in revenue to $1.06 billion (up 22.4% on a pro forma basis, representing divested operations at the end of 2023) . However, this revenue figure fell short of analysts’ consensus forecast of $1.10 billion. Adjusted earnings per share (EPS) of $2.18 also fell short of analysts’ expectations of $2.50. Despite these failures, operational improvements were evident, with gross margins reaching a record 34.1%, a result which underlines the successful integration of its Howden acquisition.

Source: Analyst estimates for the quarter provided by FactSet.

Company Overview

Chart Industries specializes in the design and manufacture of cryogenic equipment used to liquefy and store gases such as oxygen and nitrogen. It provides technology to businesses across a diverse range of sectors, including industrial and energy, where its equipment is used in liquefied natural gas, liquid hydrogen and capture, utilization and storage. carbon.

Recent strategic focuses include promoting clean energy initiatives, leveraging its diversified products and improving operational synergies, including through strategic acquisitions such as the purchase of Howden in March 2023. These Acquisitions aim to fuel revenue through integrated product solutions while improving technology and manufacturing efficiencies. Its global industrial footprint and deep customer relationships also support these goals.

Quarterly performance and achievements

During the third quarter of 2024, Chart Industries achieved a record gross margin of 34.1%, reflecting successful strategies such as cost synergies from the Howden acquisition and operational efficiencies. Pro forma revenue increased 22.4% from $867.9 million a year earlier to $1.06 billion. Notably, the heat transfer systems (HTS) segment saw orders increase by 151% due to demand from liquefied natural gas and traditional energy companies.

Adjusted EBITDA grew 53.9% to $260.7 million, illustrating the company’s operational excellence. The repair, service and rental segment also excelled, posting a 36.1% sales increase. These areas collectively illustrate a company leveraging its synergies and broad portfolio to achieve operational improvements despite market uncertainties.

Although adjusted EPS of $2.18 missed analysts’ consensus estimates due to factors such as unfavorable foreign exchange rates and a higher tax rate, operationally the company showed resilience. The Howden acquisition delivered impressive performance, indicating a successful integration and potential for future expansion.

There have been challenges, such as potential revenue volatility arising from the timing of large orders and macroeconomic headwinds, including the negative impact of foreign exchange rate fluctuations. These factors created headwinds that affected this quarter’s financial results.

Looking to the future

Management was optimistic in its guidance, forecasting full-year 2024 revenue of between $4.2 billion and $4.3 billion and adjusted EBITDA of between $1.015 billion and $1.045 billion. . Adjusted EPS is expected to be around $9. In 2025, Chart forecasts revenues between $4.65 billion and $4.85 billion and adjusted EBITDA between $1.175 billion and $1.225 billion. The company’s focus on the clean energy transition remains strong, particularly in the hydrogen and carbon capture sectors. Investors should keep an eye on how Chart executes its ongoing strategic initiatives and navigates economic uncertainties.