Chart Industries’ Earnings Call: Strong Growth Amid Challenges

Chart Industries, Inc. ((GTLS)) has held its Q1 earnings call. Read on for the main highlights of the call.

Chart Industries’ recent earnings call reflected a generally positive sentiment, marked by strong order and sales growth, consistent gross margins, and robust demand across diverse end markets. Despite these positive indicators, the company faces challenges such as negative free cash flow, tariff impacts, and declines in specific segments like Cryo Tank Solutions and Heat Transfer Systems.

Strong Order Growth

Chart Industries reported a significant increase in orders, which grew by 17.3% year-over-year to reach $1.32 billion. This growth was driven by notable projects, including the Woodside Louisiana LNG Phase 2, highlighting the company’s ability to secure substantial contracts and maintain a strong order pipeline.

Organic Sales Growth

The company experienced a 6.6% organic sales growth, bringing total sales to $1 billion. This growth was observed in three out of four segments, indicating a broad-based expansion across the company’s operations.

Gross Margin Consistency

Chart Industries achieved a gross margin of 33.9%, marking the fourth consecutive quarter where margins remained above 33%. This consistency underscores the company’s effective cost management strategies and operational efficiency.

Robust Adjusted EBITDA

The adjusted EBITDA for the quarter was $231.1 million, representing 23.1% of sales. This figure reflects an increase of 80 basis points from the previous year, demonstrating improved profitability and operational performance.

EPS Growth

The company’s adjusted diluted earnings per share saw a significant increase of 38.8%, reaching $1.86. This growth in EPS is indicative of the company’s strong financial performance and shareholder value creation.

Diverse End Market Strength

Chart Industries reported strong order activity across various sectors, including space exploration, HLNG vehicle tanks, nuclear, and marine. These sectors exceeded full-year 2024 orders in the first quarter of 2025, showcasing the company’s diverse market presence.

Positive Demand Trends

The company observed positive demand trends across most business sectors, with particular strength in data centers, AI, and LNG. This positive outlook suggests continued growth opportunities in these high-demand areas.

Data Center Market Expansion

Chart Industries’ data center customer pipeline expanded to over $400 million in opportunities, indicating strong growth potential in this rapidly evolving market.

Negative Free Cash Flow

Despite reporting a negative free cash flow of $80.1 million, the company noted an improvement of $55.6 million compared to the previous year. This suggests progress in managing cash flow challenges.

Industrial Gas and Hydrogen Market Concerns

The company is monitoring uncertainties in the industrial gas and hydrogen markets, particularly in the Americas, which could impact future performance.

Tariff Impact

Chart Industries anticipates a gross impact from tariffs estimated at approximately $50 million annually. However, the company is implementing mitigating efforts to manage these impacts effectively.

Cryo Tank Solutions Segment Decline

The Cryo Tank Solutions segment experienced a decline in orders and sales by 4.2% and 4.1%, respectively, compared to the first quarter of 2024, highlighting challenges in this specific area.

Heat Transfer Systems Order Decline

Orders in the Heat Transfer Systems segment declined by 7% year-over-year. Despite this, future order activity remains promising, suggesting potential recovery in this segment.

Forward-Looking Guidance

Looking ahead, Chart Industries reiterated its full-year guidance, supported by a robust backlog and strong aftermarket service repair business, which constitutes approximately a third of their operations. The company aims to achieve a net leverage ratio target of 2 to 2.5 within the year, indicating a focus on financial stability and growth.

In summary, Chart Industries’ earnings call highlighted a positive sentiment with strong growth in orders and sales, consistent margins, and a diverse market presence. While challenges such as negative free cash flow and segment declines exist, the company’s strategic initiatives and forward-looking guidance suggest a promising outlook for the future.