Attached files
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| 8-K - CURRENT REPORT - CHART INDUSTRIES INC | d8k.htm |
 Chart 2011
Investment Highlights 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;
a
delay,
significant
reduction
in
or
loss
of
purchases
by
large
customers;
fluctuations
in
energy
prices
and
changes
in
government
energy
policy;
uncertainties
associated
with
pending
legislative
initiatives
for
the
use
of
natural
gas
as
a
transportation
fuel;
competition;
the
negative
impacts
of
downturns
in
economic
and
financial
conditions
on
our
business;
our
ability
to
manage
our
fixed-price
contract
exposure;
our
reliance
on
key
suppliers
and
potential
supplier
failures
or
defects;
the
modification
or
cancellation
of
orders
in
our
backlog;
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;
the
Company’s
ability
to
successfully
manage
its
costs
and
growth,
including
its
ability
to
successfully
manage
operational
expansions
and
the
challenges
associated
with
efforts
to
acquire
and
integrate
new
product
lines
or
businesses;
the
impact
of
the
financial
distress
of
third
parties;
the
loss
of
key
employees
and
deterioration
of
employee
or
labor
relations;
the
pricing
and
availability
of
raw
materials;
the
regulation
of
our
products
by
the
U.S.
Food
&
Drug
Administration
and
other
governmental
authorities;
potential
future
charges
to
income
associated
with
potential
impairment
of
the
Company’s
significant
goodwill
and
other
intangibles;
the
cost
of
compliance
with
environmental,
health
and
safety
laws;
additional
liabilities
related
to
taxes;
the
impact
of
severe
weather;
litigation
and
disputes
involving
the
Company,
including
product
liability,
contract,
warranty,
intellectual
property
and
employment
claims;
and
volatility
and
fluctuations
in
the
price
of
the
Company’s
stock.
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
Technology leader -
energy industry is the largest end-user of Chart’s products
Leading position -
#1 or #2 in all primary markets served
Global footprint –
operations on four continents with about 3,000 employees
Worldwide earnings –
approximately 60% of sales derived from outside the U.S.
Company Overview
Chart Industries is a leading provider of highly engineered cryogenic
equipment for the hydrocarbon, industrial gas, and biomedical markets.
|
 Energy & Chemicals (E&C) Segment Overview
3 |
 E&C Growth Drivers and Opportunities
4
Significant exposure to expected
global energy demand growth,
especially in emerging economies
Small-mid and base load LNG global
projects
North American Natural Gas
processing
Environmental legislation and
alternative energy opportunities
Source: Gasification Technologies Council |
 Distribution & Storage (D&S) Segment Overview
5 |
 D&S Growth Drivers and Opportunities
6
Global relationships with major industrial
gas companies and distributors
World demand for industrial gases is
forecast to increase 8% annually to over
$70 billion in 2019 *
Supply of equipment for LNG virtual
pipeline, and fuel tanks for heavy duty
vehicles and marine transportation
Expanding specialty and aftermarket
business
* Source: Freedonia Group Inc, August 2010 "World Industrial
Gases" |
 BioMedical Segment Overview
7 |
 BioMedical Growth Drivers and Opportunities
Oxygen respiratory therapy growth
with aging demographics, especially
in emerging markets
Expansion of product portfolio to
non-delivery modalities with recent
SeQual acquisition
Increasing biological research
expenditures
New product development
8 |
 Global Manufacturing and Distribution Platform
9
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
Corporate
Energy & Chemicals
Distribution & Storage
BioMedical
Total:
Manufacturing:
Asia-Pacific
15
9
7
2
4
2
North America
Europe |
 Strong Track Record of Successful Execution
10
(1) Included in 2005 are non-recurring costs of $26.5 million
for the acquisition of Chart Industries by First Reserve.
During last growth cycle Company leveraged
its flexible manufacturing platform resulting in
operating income growth that outpaced sales
Flexible cost structure and good execution
allowed for aggressive response to economic
downturn resulting in higher operating income
level than last cycle low point
Improving markets and good performance
continue to drive favorable earnings and cash
generation, resulting in strong balance sheet
with significant liquidity
Similar or higher growth, leveraged by
acquisitions, expected to occur again during
the current growth cycle |
 Growth Initiatives
11
Organic growth
Consolidation
Internal product
development
Bolt-on
New Platform
Internal market
development
Bolt-on
Existing
Products
New Products
Existing
Markets
New Markets
Organic
Inorganic
Emerging Markets
-
China/Asia LNG
Emerging Products
-
Natural Gas Production
-
LNG “Virtual Pipeline” |
 12
Growing industry -
Natural gas demand is expected to continue to grow at a pace faster than coal and
oil, and will be heavily weighted towards emerging economies, which is
expected to drive demand for Chart’s products.
Natural gas expansion -
U.S. natural gas processing is expected to rise due to the production of
unconventional gas. World primary demand for natural gas expands on average
by 1.4% per year (2008-2035) with the biggest increases in the
Middle East, China and India. (Source: International Energy
Agency –
World Energy Outlook 2010, New Policies Scenario)
LNG growth leader -
“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
– December 2009)
Global Natural Gas Production and Demand
Source: ExxonMobil –
Outlook for Energy, A View to 2030
World Natural Gas Production by Type
Source: IEA –
World Energy Outlook 2010, New Policy Scenario |
 13
Dramatic increase in imported LNG in China has already begun and
is expected to accelerate, with China
aggressively investing in LNG infrastructure, including LNG transportation and
storage equipment China’s twelfth 5-year plan (2011 -
2015) mandates an increase of gas as a percentage of energy consumption
from less than 4% to over 8% (compared to over 20% for the U.S.)
China road transit authority expects to add 2 million new gas fueled vehicles, with
2/3 being LNG Lack of pipeline infrastructure in China requires “virtual
pipeline” with LNG, and Chart D&S equipment (e.g.,
storage, transportation, etc.) can fill this gap
China LNG Demand Outlook
Source: Company Estimates |
 14
Natural gas penetration –
Increasing as a viable energy
source and transportation fuel due to its high energy density,
lower costs and low emissions
Broad product offering -
Chart provides products and
solutions for the full LNG value chain: LNG liquefiers,
transportation equipment, terminal storage equipment and
vehicle tanks for both on-road and off-road heavy duty
vehicles and marine applications
Favorable environment -
Energy bill initiatives in Congress
could significantly boost natural gas vehicle adoption in U.S.
and drive a multi-year build-out of LNG production, storage
and distribution infrastructure and creating additional market
opportunities for Chart
LNG “Virtual Pipeline”
and Transportation Fuel
Source: ExxonMobil –
Outlook for Energy, A View to 2030 |
 15
Historical Orders and Backlog |
 2011
Outlook Global markets are expected to continue their recovery during 2011
with the return of significant project work in the E&C business and
continued growth in LNG-related orders in the D&S business
Received
an
NRU
(Nitrogen
Rejection
Unit)
order
in
excess
of
$90
million
in
first
quarter
2011.
We
remain
optimistic about additional large project opportunities in the E&C
business 2011 net sales are expected to be in a range of $710 to $750 million
and earnings of $1.50 to $1.70 per diluted share. Our EPS range
includes approximately $0.20 per diluted share for anticipated restructuring charges for
the recently completed SeQual acquisition and trailing costs associated with the
shutdown of the Plainfield, Indiana facility acquired from Covidien.
Therefore, our adjusted EPS would be $1.70 to $1.90 per share. The majority
of these restructuring charges will occur in the first half of 2011, so second half earnings will be
much stronger than the first half. In addition, first quarter is normally our
weakest quarter of the year. 16 |
 Summary of Investment Highlights
Positioned for continued significant growth as markets continue to recover
–
Substantial organic growth expected, especially in China and across Asian markets
–
New product development taking advantage of leading proprietary technology and
designs –
Strong track record of maximizing operating efficiencies and growth
–
Continued
inorganic
growth
initiatives
with
continued
strategic,
accretive
acquisition
activity
Flexible Manufacturing Platform
–
Ability to rapidly adjust production as demand fluctuates
–
Necessary capacity expansion or contraction is easily attainable
without significant spend
Very strong balance sheet
–
Improved net debt position, but will continue to optimize capital structure
–
Substantial
free
cash
flow
growth
and
liquidity,
especially
with
new
senior
credit
facility
Very stable business model
–
Attractive industry with long-term customer relationships
–
Solid platform with worldwide presence and leading market positions in all
segments 17
Chart represents a unique investment opportunity to capitalize on the return of
strong growth in the markets it serves |