Chart Industries, Inc., a leading independent global manufacturer of highly engineered equipment used in the production, storage and end-use of hydrocarbon and industrial gases, today reported results for the third quarter ended September 30, 2013.
- Sales up 19% from prior year quarter
- Backlog up 12% sequentially to a record $743.4 million
- Order activity strong; includes previously announced large awards for small scale LNG liquefaction in North America and LNG infrastructure build-out in China, and a new award for 20 LNG fueling stations in North America
- Announcement of new manufacturing capacity in China for brazed aluminum heat exchanger operations
Net income for the third quarter of 2013 was $24.4 million, or $0.74 per diluted share. This compares with net income of $18.5 million, or $0.61 per diluted share, for the third quarter of 2012. Third quarter 2013 earnings would have been $0.82 per diluted share excluding $1.0 million, or $0.02 per diluted share, of costs recorded in the quarter largely associated with the AirSep acquisition, as well as a $0.06 per diluted share impact associated with Chart’s Convertible Notes given Chart’s stock price performance.
Chart’s average common stock price was $112.45 in the third quarter, which exceeded the Notes’ conversion price of $69.03 and our warrants’ strike price of $84.96. This resulted in the inclusion of an additional 2,221,680 shares related to the Notes in the Company’s diluted earnings per share calculation for the quarter. The associated hedge, which helps offset this dilution, cannot be taken into account under Generally Accepted Accounting Principles. If the hedge could have been considered, it would have reduced the additional shares by 1,336,383 resulting in the inclusion of only 885,297 additional shares related to the Notes. Although the Notes remain convertible at the option of the holders, there have been no conversions to date.
Third quarter 2012 earnings would have been $0.66 per share excluding $2.0 million, or $0.05 per diluted share, of costs largely associated with the AirSep acquisition, which closed in August 2012.
Net sales for the third quarter of 2013 increased 19% to $301.8 million from $254.2 million in the comparable period a year ago. Gross profit for the third quarter of 2013 was $88.6 million, or 29.4% of sales, versus $78.0 million, or 30.7% of sales, in the comparable quarter of 2012.
“Order activity for LNG related equipment remains strong, bolstered by positive news across the LNG value chain,” stated Sam Thomas, Chart’s Chairman, President and Chief Executive Officer. “On the supply side, we are seeing commitments being made in North America to expand small and mid-scale LNG liquefaction capacity. We’re also seeing progression in the build-out of LNG fueling infrastructure, as evidenced by the award received this quarter from a major oil company to build 20 fueling stations. On the end-user side, we are seeing growing demand for LNG equipment, especially for oilfield and transportation applications.”
Mr. Thomas continued, “We’re also excited to announce new heat exchanger capacity in China, which will help Chart meet global demand for brazed aluminum heat exchangers, across all industry sectors, and position Chart with market leading delivery schedules.”
Backlog at September 30, 2013 was $743.4 million, a new record, and up 12% from the June 30, 2013 level of $664.0 million. Orders for the third quarter of 2013 were $370.1 million compared with $369.7 million for the second quarter of 2013.
Selling, general and administrative expenses for the third quarter of 2013 increased $5.7 million compared with the same period in 2012 to $47.9 million, or 15.9% of sales. SG&A expenses in the third quarter of 2012 were 16.6% of sales. The additional costs in the current quarter are primarily due to the AirSep acquisition, commissions due to the higher sales, and employee-related costs as we pursue LNG-related growth opportunities.
Net interest expense was $4.1 million for the third quarter of 2013, which included $2.5 million of non-cash accretion expense associated with the Company’s Notes. Net cash interest was $1.7 million.
Income tax expense was $7.0 million for the third quarter of 2013 and represented an effective tax rate of 21.9% compared with 30.7% in the prior year quarter. The rate was lower in the current quarter due to increased research and development credits and the effect of income earned by certain of the Company’s foreign entities being taxed at lower rates representing a higher portion of income.
Cash and short-term investments were $151.8 million at September 30, 2013, compared with $125.8 million at June 30, 2013.
LNG World News Staff, November 01, 2013