Chart Industries, Inc. (NYSE:GTLS) Q3 2023 Earnings Conference Call October 27, 2023 8:30 AM ET

Company Participants

Jill Evanko – President and Chief Executive Officer

Joe Brinkman – Chief Financial Officer

Conference Call Participants

Ben Nolan – Stifel

Martin Malloy – Johnson Rice

Eric Stine – Craig-Hallum

Marc Bianchi – TD Cowen

Pavel Molchanov – Raymond James

Craig Shere – Tuohy Brothers

Ati Modak – Goldman Sachs

Rob Brown – Lake Street Capital

Sherif Elmaghrabi – BTIG

Operator

Good morning and welcome to Chart Industries, Inc. 2023 Third Quarter Results Conference Call. All lines have been placed on mute to prevent background noise. After the speakers’ remarks, there will be a question-and-answer session. The company’s release and supplemental presentation were issued earlier this morning. If you have not received the release, you may access it by visiting Chart’s website at www.chartindustries.com. A telephone replay of today’s broadcast will be available following the conclusion of the call until Friday, November 24, 2023. The replay information is contained in the company’s press release.

Before we begin, the company would like to remind you that statements made during this call that are not historical facts are forward-looking statements. Please refer to the information regarding forward-looking statements and risk factors included in the company’s earnings release and latest filings with the SEC. The company undertakes no obligation to update publicly or revise any forward-looking statements.

I would now like to turn the conference call over to Jill Evanko, Chart Industries’ President and CEO. Please go ahead.

Jill Evanko

Thank you, Sylvie. Good morning, everyone, and thank you for joining Joe Brinkman, our CFO, and me to walk through our record third quarter 2023 results starting on Slide 5 of the supplemental deck. We are very pleased with our team’s positive momentum on integration progress, financial results, deleveraging, and delivering on the broad-based demand that we saw continue through the third quarter. One very positive accomplishment that I want to start with is that we have achieved approximately $500 million of cash proceeds from a subset of the originally defined divestiture perimeter with the signing and closing yesterday of the sale of our American Fans business to Arcline for $111 million in an all-cash deal with multiples in-line with prior Chart transactions.

In addition, we expect approximately $80 million next Tuesday from the earlier than expected Cofimco sale closing and also expect to close the $4.25 million Cryo Diffusion sale next week. We have one additional business that was considered in the original asset sale perimeter that has not been sold, and we are evaluating whether we will proceed with the divestiture or keep the business within our portfolio. We also generated net cash from operating activities from continuing operations of $104.4 million and $142.2 million when adjusted for M&A transaction fees and cash costs. Combined with our margin strength, we are at 3.59 net leverage ratio which was pro forma for the announced divestitures of 3.47. We reiterate our expectation to achieve our target net leverage range of 2.5 to 2.9 by the middle of 2024.