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| 8-K - 8-K - CHART INDUSTRIES INC | d261137d8k.htm |
 CHART INDUSTRIES, INC. DAHLMAN ROSE & CO.
ULTIMATE OIL SERVICES AND DRILLING
CONFERENCE
November 29 & 30, 2011
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;
changes
in
government
energy
policy
or
failure
of
expected
changes
in
policy
to
materialize;
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
and
transactions;
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
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
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,
employment
and
environmental
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 |
 GTLS: GAS TO LIQUID SYSTEMS
Technology leader that provides high-end equipment to the energy industry,
which is the largest end-user of Chart’s products
One of the leading suppliers in all primary markets served
Global footprint for our operations on four continents with approximately 3,500
employees Worldwide earnings with 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
Asia
21%
U.S.
44%
Americas
(Non-US)
10%
RoW
2%
Europe
23%
LTM June 2011Sales by Segment
Energy
47%
BioMedical
27%
General
Industrial
26%
LTM June 2011 Sales by Region
LTM June 2011 Sales by End-User
Energy &
Chemicals
26%
Distribution
& Storage
48%
BioMedical
26%
2 |
 GTLS: GAS TO LIQUID SYSTEMS
Energy & Chemicals (E&C) Segment Overview
Heat Exchanger
Cold Box
Production
Heat
Exchangers
80%
Cold Boxes and
LNG VIP
20%
LTM June 2011 Sales by Product / Region
Highlights
Technology
leader
-
providing
heat
exchangers
and
cold
boxes critical to LNG, Olefin petrochemicals, natural gas
processing and industrial gas markets
–
Separation, liquefaction and purification of hydrocarbon and
industrial gases
Market
leader
–
leading
market
positions
worldwide
Manufacturing
leader
-
one
of
three
global
suppliers
of
mission-critical LNG and LNG liquefaction equipment
Selected Products
Americas
(Non-US)
15%
RoW 4%
Asia
30%
U.S.
49%
Europe
2%
3 |
 GTLS: GAS TO LIQUID SYSTEMS
Distribution & Storage (D&S) Segment Overview
LTM June 2011 Sales by Product / Region
Highlights
Balanced
customer
base
-
45%
of
segment
sales
derived
from products used in energy applications
Strategic
footprint
–
manufacturing
located
near
growing
end
markets and lower-cost countries
–
Positioned to capitalize on strong expected growth in Asia and
–
Continued investment in key global manufacturing facilities
Bulk
MicroBulk
Distribution
Storage
Selected Products
Satellite
LNG Storage
Bulk Storage
Systems
34%
Packaged Gas
Systems
31%
VIP, Systems
and Components
11%
Parts, Repair and On-
Site Service
11%
Beverage Liquid
CO
2
Systems
7%
LNG Terminals
and Vehicle Fuel
Systems 6%
Americas
(Non-US)
10%
RoW
2%
Asia
21%
U.S.
45%
Europe
22%
4
Eastern
Europe
(supplemented
by
3
Qtr.
acquisition
in
Germany)
rd |
 GTLS: GAS TO LIQUID SYSTEMS
BioMedical Segment Overview
LTM June 2011 Sales by Product / Region
Highlights
Strong
growth
-
increase
in
oxygen
respiratory
therapy
and
biomedical research, led by international markets, expected
Robust end markets include:
–
Home healthcare and nursing homes
–
Hospitals and long-term care
–
Biomedical and pharmaceutical research
–
Animal breeding
Portable Oxygen
Lab Storage
Stainless Steel Freezer
End-Use Consumption
Respiratory
Therapy
Systems
67%
Biological
Storage
Systems
33%
Selected Products
Americas
(Non-US)
5%
U.S.
39%
Europe
45%
Asia
10%
5
RoW
1% |
 GTLS: GAS TO LIQUID SYSTEMS
Global Manufacturing and Distribution Platform
Operating
leverage
provides
the
flexibility
to
expand
and
reduce
capacity
as
needed
with minimal capital expenditures
Major manufacturing locations include:
China,
Changzhou (D&S and E&C) and Chengdu (BioMedical)
Czech Republic,
Decin (D&S)
Georgia,
Canton and Minnesota, New Prague (D&S and BioMedical)
Wisconsin,
La Crosse,
Louisiana,
New Iberia and
Oklahoma,
Tulsa (E&C)
Expansion of facilities in China, Louisiana and Minnesota are currently in
process Manufacturing facilities are strategically located in lower-cost
countries and near centers of demand
Corporate
Energy & Chemicals
Distribution & Storage
BioMedical
Asia-Pacific
North America
Europe
6 |
 GTLS: GAS TO LIQUID SYSTEMS
Growth Opportunities
7
E&C
•
Global base load LNG
projects
•
Growth in natural gas
processing
•
Emerging market
opportunities
D&S
•
Global LNG opportunity
•
Strong relationships with
Industrial Gas customers
•
Demand for Industrial Gas
projected to increase 8%
per year
BioMedical
•
Aging demographics
•
Product expansion
•
Increasing biological
research |
 GTLS: GAS TO LIQUID SYSTEMS
Natural Gas Expected To Grow Globally
8
Natural
gas
expansion
-
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
LNG
growth
leader
–
The
natural
gas
industry
is
expected
to
invest
approximately
$720
billion
in
LNG
facilities
from
2009
to
2035,
with
LNG
reaching
25%
of
world
demand
in
2035
(Source:
International
Energy
Agency –
World Energy Outlook 2011, Golden Age of Gas Scenario)
Source:
ExxonMobil
–
Outlook for
Energy, A
View
to
2030 |
 GTLS: GAS TO LIQUID SYSTEMS
Increasing
natural
gas
penetration
as
a
viable
energy
source
and
transportation
fuel
due
to
its
high
energy
density,
lower
costs,
cleaner
emissions
profile,
and
plentiful
supply
due
to
improved
drilling
technologies (e.g. shale gas). U.S. trucking is converting a portion of its fleets
to natural gas. Recent
announcements
in
domestic
LNG
infrastructure
by
major
natural
gas
producers
and
equipment providers have validated expectations
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%
Dramatic increase in imported LNG in China is in process and is expected to
continue, with significant investment in infrastructure, including LNG
transportation and storage equipment Lack
of
pipeline
infrastructure
in
China
requires
“virtual
pipeline”
with
LNG
Chart
provides
a
broad
offering
of
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
LNG Value Chain Opportunities
9 |
 GTLS: GAS TO LIQUID SYSTEMS
Core Competencies
Proprietary Technology
Global Platform
Financial Strength
New Products
New Segments
New Geographies
Current Platforms
E&C
D&S
BioMedical
New Platform
+
=
Business Differentiators
Growth Enablers
Value Added Acquisitions
Acquisitions Enhancing Shareholder Value
Continue investment in current platforms
-10 acquisitions since 2005
Seeking new business platform
10 |
 GTLS: GAS TO LIQUID SYSTEMS
Strong Track Record of Successful Execution
Last Growth
Cycle CAGR
(2004-2008)
Sales 25%
Oper. Inc. 38%
¹Included 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
11
Similar or higher growth, leveraged by
acquisitions, expected to occur again during the
current growth cycle
YTD September 2011 sales of $574.9 million
continue to ramp up significantly
1
10
20
30
40
50
60
70
200
250
300
350
400
450
500
550
600
YTD Sept 10
YTD Sept 11
Sales
Operating Income
0
20
40
60
80
100
120
140
160
0
100
200
300
400
500
600
700
800
2004
2005
2006
2007
2008
2009
2010
LTM
9/30
Sales
Operating Income |
 GTLS: GAS TO LIQUID SYSTEMS
Historical Orders and Backlog
Backlog
12
Orders
Note
1
-
Q1
2011
includes
a
$95
million
NRU
order
for
gas
project
in
Qatar
and
Q2
2011
includes a $45 million order for a base load LNG project in Eastern Australia
$
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Q2
2011
Q3
2011 |
 GTLS: GAS TO LIQUID SYSTEMS
Very Stable Business Model
•
Attractive industry with long-term
customer relationships
•
Solid platform with worldwide
presence and leading market
positions in all segments
Summary of Investment Highlights
13
Strong Balance Sheet
•
Strong organic earnings should provide
substantial free cash flow and liquidity
•
Permit continued accretive organic /
inorganic growth
Positioned for Significant Growth
•
Exploit LNG and NG growth
•
Opportunities with global
infrastructure build-out
•
New product development and
innovation
•
Expanded new business and
inorganic pipeline
Chart continues to represent a unique investment opportunity to capitalize on global
energy demand, growth in natural gas use, and biomedical opportunities
Flexible / Low Cost Capital Structure
•
•
7 yr. $250 million convertible notes -
2% cash interest cost
Actively monitor financing opportunities
with a view toward cost efficiency and
financial flexibility |