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| 8-K - CURRENT REPORT - CHART INDUSTRIES INC | d8k.htm |
 Chart Industries, Inc.
Investment Highlights
August 2010
Exhibit 99.1 |
 Disclosure
Forward-Looking
Statements:
This
presentation
includes
“forward-looking
statements”
within
the
meaning
of
the
Private
Securities
Litigation
Reform
Act
of
1995.
The
use
of
words
such
as
“may”,
“might”,
“should”,
“will”,
“expect”,
“plan”,
“anticipate”,
“believe”,
“estimate”,
“project”,
“forecast”,
“outlook”,
“intend”,
“future”,
“potential”
or
“continue”,
and
other
similar
expressions
are
intended
to
identify
forward-looking
statements.
All
of
these
forward-looking
statements
are
based
on
estimates
and
assumptions
by
our
management
as
of
the
date
of
this
presentation
that,
although
we
believe
to
be
reasonable,
are
inherently
uncertain.
Forward-looking
statements
involve
risks
and
uncertainties
that
could
cause
the
Company’s
actual
results
or
circumstances
to
differ
materially
from
those
expressed
or
implied
by
forward-looking
statements.
These
risks
and
uncertainties
include,
among
others,
the
following:
the
cyclicality
of
the
markets
that
the
Company
serves
and
the
vulnerability
of
those
markets
to
economic
downturns;
the
negative
impacts
of
the
recent
global
economic
and
financial
crisis;
a
delay,
significant
reduction
in
or
loss
of
purchases
by
large
customers;
fluctuations
in
energy
prices;
competition;
our
reliance
on
key
suppliers
and
potential
supplier
failures
or
defects;
the
modification
or
cancellation
of
orders
in
our
backlog;
the
impact
of
the
financial
distress
of
third
parties;
changes
in
government
healthcare
regulations
and
reimbursement
policies;
general
economic,
political,
business
and
market
risks
associated
with
the
Company's
global
operations;
fluctuations
in
foreign
currency
exchange
and
interest
rates;
potential
future
charges
to
income
associated
with
potential
impairment
of
the
Company’s
significant
goodwill
and
other
intangibles;
the
Company's
ability
to
successfully
manage
its
costs,
core
business
resources
and
growth,
including
its
ability
to
successfully
acquire
and
integrate
new
product
lines
or
businesses
and
manage
operational
expansions;
the
loss
of
key
employees
and
deterioration
of
labor
and
employee
relations;
the
pricing
and
availability
of
raw
materials;
the
Company's
ability
to
manage
its
fixed-price
contract
exposure;
the
regulation
of
our
products
by
the
U.S.
Food
&
Drug
Administration
and
other
governmental
authorities;
additional
liabilities
related
to
taxes;
the
costs
of
compliance
with
environmental,
health
and
safety
laws,
and
potential
liabilities
under
these
laws;
the
impact
of
hurricanes
and
other
severe
weather;
litigation
and
disputes
involving
the
Company,
including
product
liability,
contract,
warranty,
pension,
intellectual
property
and
employment
claims;
volatility
and
fluctuation
in
the
price
of
the
Company’s
stock;
and
risks
associated
with
our
indebtedness.
For
a
discussion
of
these
and
additional
risks
that
could
cause
actual
results
to
differ
from
those
described
in
the
forward-looking
statements,
see
disclosure
under
Item
1A.
“Risk
Factors”
in
the
Company’s
most
recent
Annual
Report
on
Form
10-K
and
other
recent
filings
with
the
Securities
and
Exchange
Commission,
which
should
be
reviewed
carefully.
Please
consider
the
Company’s
forward-looking
statements
in
light
of
these
risks.
Any
forward-looking
statement
speaks
only
as
of
its
date.
We
undertake
no
obligation
to
publicly
update
or
revise
any
forward-looking
statement,
whether
as
a
result
of
new
information,
future
events
or
otherwise,
except
as
required
by
law.
1 |
 2
Energy industry is the largest end-user of the Company’s products
#1 or #2 in all primary markets served
Global operations with 12 manufacturing facilities and about 2,500 employees
$592 million of sales,$94 million of operating income
in 2009
Company Overview
Chart Industries is a leading provider of highly engineered cryogenic
equipment for the hydrocarbon, industrial gas, and biomedical markets.
Asia
23%
U.S.
41%
Americas
(Non-US)
6%
RoW
12%
Europe
18%
2009 Sales by Segment
Energy
63%
BioMedical
15%
General
Industrial
22%
2009 Sales by Region
2009 Sales by End-User
Energy &
Chemicals
43%
Distribution
& Storage
42%
BioMedical
15% |
 E&C Segment Overview
3
Heat Exchanger
Cold Box
Production
Heat
Exchangers
68%
Cold Boxes and
LNG VIP
32%
2009 Sales by Product/Region
Highlights
Leading provider of heat exchangers and cold boxes critical
to LNG, Olefin petrochemicals and natural gas processing
markets
–
Separation, liquefaction and purification of hydrocarbon and
industrial gases
Leading market positions domestically and internationally
One of three global suppliers of mission-critical LNG and
LNG liquefaction equipment
Selected Products
Americas
(Non-US)
5%
RoW
20%
Asia
38%
U.S.
36%
Europe
1% |
 D&S Segment Overview
4
2009 Sales by Product/Region
Highlights
46%
of 2009 segment sales derived from products used in
energy applications
Manufacturing strategically located near growing end
markets and lower-cost countries
–
Positioned to capitalize on strong expected growth in Asia and
Eastern Europe
–
Continued investment in key global manufacturing facilities
Bulk
MicroBulk
Distribution
Storage
Selected Products
Satellite
LNG Storage
Bulk Storage
Systems
46%
Packaged Gas
Systems
22%
VIP, Systems
and Components
6%
Parts, Repair and On-
Site Service
11%
Beverage Liquid
CO
Systems
8%
LNG Terminals
and Vehicle Fuel
Systems 7%
Americas
(Non-US)
7%
RoW
5%
Asia
13%
U.S.
49%
Europe
26%
2 |
 BioMedical
Segment Overview
5
2009 Sales by Product/Region
Highlights
Strong expected growth in oxygen respiratory therapy and
biomedical research, led by international markets
End markets include:
–
Home healthcare and nursing home
–
Hospitals and long-term care
–
Biomedical and pharmaceutical research
–
Animal breeding
Portable Oxygen
Lab Storage
Stainless Steel Freezer
End-Use Consumption
Respiratory
Therapy
Systems
46%
Other
5%
Biological
Storage
Systems
49%
Selected Products
Americas
(Non-US)
9%
U.S.
34%
Europe
47%
Asia
10% |
 Summary of Investment Highlights
End markets are positioned to recover with strong energy demand
–
Energy demand recently forecasted to expand 40% between now and 2030*
–
Global investment of $26 trillion, over $1 trillion/year, is needed to keep up with
demand* A market leader
–
Leading market position in all segments
–
Strong balance sheet with significant liquidity
Aggressive response to the economic downturn
–
Cost management made a priority along with operations excellence
–
Flexible cost structure provides the ability to quickly downsize
SG&A and plant overhead costs
–
Have emerged more strongly positioned
Continued growth initiatives
–
Six acquisitions completed since 2006
–
Expect continued strategic, accretive acquisition activity
–
New product development taking advantage of leading proprietary technology and
designs Strong track record of maximizing operating efficiencies and
growth –
14% sales compound annual growth rate (“CAGR”) 2004 through 2009
–
21% operating income CAGR 2004 through 2009
6
*
Source:
International
Energy
Agency
-
World
Energy
Outlook
2009,
Reference
Scenario.
Based
on
assumption
that
governments
do
not
change
their
policies
relating
to
energy;
differences
would
arise
should
governments
change
energy
policies |
 7
World primary demand for natural gas expands on average by 1.5% per year. The
biggest increases occur in the
Middle
East,
China
and
India.
New
power
generation
stations
absorb
45%
of
the
increase.
*
“Global
gas
demand
is
likely
to
rise
by
25%,
while
the
use
of
LNG
is
set
to
surge
by
40%
by
2020.”
Source:
ExxonMobil
quoted
at
CWC
World
LNG
Summit,
Barcelona
-
(12/2/2009)
$220 billion annual investment into the entire gas-supply infrastructure is
needed through 2030 * “China’s
LNG
demand
forecast
for
2020
raised
by
48%.”
Source:
Wood
Mackenzie
Consultants
Ltd.
–
(7/26/2010)
* Source:
International
Energy
Agency
–
World
Energy
Outlook
2009, Reference Scenario
Reference Scenario based on assumption that governments do
not change their policies relating to energy; differences would
arise should governments change energy policies
Energy Trends
World Primary Energy Demand by Fuel* |
 8
Natural gas is increasing its penetration as a viable transportation fuel due to
its high energy density, lower costs, and low emissions
Chart
provides
products
/
solutions
for
the
full
LNG
value
chain
from
LNG
terminal
equipment
/ liquefiers to on-board fuel tanks
Technical and proprietary innovation with numerous patents granted in our LNG
products Energy Trends |
 Growth Initiatives
9
Current economic environment continues to provide acquisition opportunities for Chart
with its strong balance sheet and more than adequate liquidity
Chart’s acquisition criteria
–
Global niche engineered equipment, systems or aftermarket business
–
Fit with Chart value proposition including product/technology synergies
–
#1 or potential to become #1 within existing or adjacent growth markets
–
Geographic expansion or cost savings synergies
Completed six acquisitions since 2006
–
Cooler Service – air cooled heat exchangers – 2006
–
Flow Instruments – flow meter systems – 2008
–
Tri-Thermal – heat exchanger aftermarket parts – 2009
–
Golden Phoenix – biological storage containers – 2009
–
Covidien – liquid oxygen therapy systems – 2009
–
Cryotech International – cryogenic injectors, vacuum insulated piping
systems/manifolds and liquid cylinder repair -
2010 |
 Global Manufacturing and Distribution Platform
10
Operating leverage provides the flexibility to expand and reduce
capacity
as needed with minimal capital expenditures
Manufacturing facilities are strategically located in lower-cost countries and
near centers of demand
Total:
Manufacturing:
Europe
Asia-Pacific
12
8
4
2
3
2
North America
Corporate
Energy & Chemicals
Distribution & Storage
BioMedical |
    Strong Track Record of Successful Execution
11
Drivers of Growth
Energy & Chemicals
–
Significant exposure to expected global
energy demand growth
–
Environmental legislation and alternative
energy opportunities
Distribution & Storage
–
Expanding aftermarket business
–
Global relationships with major industrial gas
companies
–
Well positioned in areas of expected growth
–
Alternative fuel opportunities with LNG
BioMedical
–
Liquid oxygen growth in emerging markets
–
Increasing biological research expenditures
–
Aging demographic
CAGR
(2004-2009)
Sales 14%
Oper. Inc. 21%
CAGR
(2004-2009)
Sales 14%
Oper. Inc. 21%
(1) Included in 2005 are non-recurring costs of $26.5 million for
the acquisition of Chart Industries by First Reserve.
(1)
0
20
40
60
80
100
120
140
160
0
100
200
300
400
500
600
700
800
2004
2005
2006
2007
2008
2009
Sales
Operating Income |
 12
2010 Outlook
We
continue
to
see
an
improving
global
market
in
all
of
our
business
segments
including
more
quote
opportunities
and
orders
The
Company
successfully
completed
a
new
$200
million
senior
secured
credit
facility
during
the
2
nd
quarter.
The
refinancing
extends
maturity
profile,
improves
liquidity
and
maintains
modest
total
and
net
leverage
First
and
second
quarter
financial
results
were
in
line
with
our
expectations
and
within
the
analysts’
forecasted
ranges
after
excluding
restructuring
costs,
etc.
We
reaffirmed
our
outlook
for
the
year
with
net
sales
of
$530
to
$560
million
and
earnings
of
$0.40
to
$0.60
per
diluted
share.
Our
EPS
range
includes
$0.20
of
restructuring
and
acquisition
costs,
and
the
write-off
of
non-cash
deferred
financing
costs
as
a
result
of
our
debt
refinancing.
Therefore,
our
adjusted
EPS
would
be
$0.60
to
$0.80
per
share
excluding
these
costs. |
 Positioned on Strong and Stable Platform for Growth
Flexible Manufacturing Platform
–
Ability to ramp up or scale back production as demand fluctuates
–
Necessary capacity expansion/contraction is easily attainable
–
Proven ability to implement cost-savings measures during periods of sharp
decline Very strong balance sheet
–
Significant improvement in net debt position
–
Substantial free cash flow growth
–
Continued ability to invest in and take advantage of growth opportunities
Stable business model
–
Attractive industry with long-term customer relationships
–
Solid platform with worldwide presence and leading market positions in all
segments Positioned for continued significant growth as markets recover
–
Strong track record of maximizing operating efficiencies and growth
13
Chart represents a unique investment opportunity to capitalize on the return
of strong growth in the markets it serves |