Chart Q4 2022 Earnings Report
Key Takeaways
Chart Industries reported record fourth quarter 2022 results, including record sales of $441.4 million and operating income of $60.1 million. Adjusted non-diluted EPS was a quarterly record at $1.67. The company's record backlog provides strong visibility into 2023.
Record fourth quarter 2022 sales of $441.4 million contributed to record full year 2022 sales of $1,612.4 million, an increase of 22.4% compared to 2021.
Record fourth quarter operating income of $60.1 million (adjusted $75.0 million) and record fourth quarter operating income as a percent of sales of 13.6% (adjusted 17.0%).
Reported fourth quarter 2022 non-diluted earnings per share (“EPS”) of $0.42; when adjusted for one-time items, fourth quarter adjusted non-diluted EPS was $1.67, a quarterly record.
Fourth quarter 2022 net cash provided by operations of $30.5 million before $26.0 million of capital expenditures; when adjusted for one-time items, fourth quarter 2022 adjusted free cash flow of $71.5 million.
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Forward Guidance
Chart standalone (excluding Howden) 2023 outlook reiterated and supported by record backlog of $2,338.1 million and a strong start to our order book in 2023
Positive Outlook
- It is not unusual for project revenue to shift between quarters. We anticipate realizing pushed Q422 revenue in 2023 based on customer, project and material receipt timing.
- Our outlook does not include any additional mid-size or large project orders between now and the end of the first half 2023, which could provide additional revenue in the second half of 2023.
- Even though we are seeing early end market improvement in HLNG vehicle tank sales, our forecast for HLNG vehicle tank sales is flat with 2022.
- As of December 31, 2022, we had record backlog of $2,338.1 million, with approximately 60% of the full year 2023 sales outlook already in backlog, which is meaningfully higher than in prior years
- We have existing capacity to deliver on our backlog and any potential new orders that could materialize throughout the year.
Challenges Ahead
- Our guidance does not include the impact of the pending acquisition with Howden, which is expected to close in the next 45 days.
- We are also adjusting for acquisition and divestiture costs, restructuring, and interest on Chart’s long-term debt to fund the Howden transaction placed in December 2022.
- Chart anticipates the absolute level of adjustments to decrease in 2024, and effective in the fourth quarter 2022, we are no longer adjusting strategic inventory items for free cash flow.
- Seasonally, as in past years, our first quarter is typically our lowest quarter of the year, and we expect our normal first quarter seasonality.
- Given this and the timing of our backlog, we expect quarterly revenues, gross margin and operating margins will increase over the course of the year.