CLEVELAND, Oct. 28, 2010 (GLOBE NEWSWIRE) -- Chart Industries, Inc. (Nasdaq:GTLS), 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, 2010. Highlights include:
- Strongest quarterly order intake in two years
- Earnings guidance revised upward
- Energy & Chemicals margin performance improves over 1
- Completed acquisition of Cryotech International
Net income for the third quarter of 2010 was $6.6 million, or $0.23 per diluted share. This compares with $8.2 million, or $0.28 per diluted share, for the third quarter of 2009. The third quarter of 2010 included $1.5 million or $0.04 per diluted share, of restructuring costs associated with the announced shutdown of the Plainfield, Indiana facility acquired from Covidien and acquisition related costs associated with the Cryotech acquisition. The third quarter of 2009 also included restructuring costs of $1.2 million, or $0.03 per diluted share, primarily related to planned workforce reductions as part of the Company's cost reduction initiatives.
Third quarter 2010 earnings would have been $0.27 per diluted share excluding the $0.04 per share of restructuring and acquisition related costs. Third quarter of 2009 earnings would have been $0.31 per diluted share excluding the $0.03 per share of restructuring costs in that period.
Net sales for the third quarter of 2010 increased 8% to $139.2 million from $128.8 million in the comparable period a year ago. Gross profit for the third quarter of 2010 was $42.8 million, or 30.7% of sales, versus $39.4 million, or 30.6% of sales, in the comparable quarter of 2009.
Backlog at September 30, 2010 was $212.6 million, up 6% from the June 30, 2010 level of $199.9 million. Orders for the third quarter of 2010 were $146.8 million compared with second quarter 2010 orders of $136.2 million.
"Our financial results for the quarter reflect the improving global market we're seeing for all of our business segments," stated Sam Thomas, Chart's Chairman, President and Chief Executive Officer. "Our strong order intake included equipment for LNG 'virtual pipeline' and LNG vehicle fueling projects as this part of our business continues to grow. We are excited about the potential for a range of new LNG opportunities including marine and mining applications, resulting from the push for new sources of cleaner and lower cost energy."
During the third quarter, the Company announced the acquisition of the Cryotech International business. Cryotech designs, manufactures, sells and services cryogenic injectors, vacuum insulated piping systems, and manifolds, and also repairs liquid cylinders. Cryotech sells its products globally and industry applications include food and beverage packaging, aerospace and defense, semiconductor, pharmaceutical, biotechnology, solar and electronics. Combining Cryotech's direct to end user sales and existing sales and service capability with Chart's sales and distribution network should drive incremental sales volume.
"Our liquidity and strong balance sheet position us for accretive growth opportunities such as Cryotech as well as future acquisitions," stated Mr. Thomas. "We will continue to seek high growth opportunities, including new product applications, as we continue to expand our business. We are excited about Chart being named as a participant in a recent U.S. Department of Energy project award to help develop and test membrane reactors to improve the efficiency of hydrogen production from coal-derived synthesis gas utilizing our core braze manufacturing, plus heat and mass transfer process expertise. This technology has broad application potential to improve the efficiency and cost in the area of hydrogen production, gas to liquids production for stranded natural gas monetization, petrochemical feedstock production from coal in the U.S., China and India, and ultimately production of biofuels."
Selling, general and administrative ("SG&A") expenses for the third quarter of 2010 compared to the same period in 2009, increased $5.4 million to $26.2 million. This was primarily due to higher employee-related costs and sales commissions due to acquisitions and improving business conditions.
Income tax expense was $2.3 million for the third quarter of 2010 and represented an effective tax rate of 25.4% compared with $3.5 million in the prior year quarter, or an effective tax rate of 29.9%. The decline in the third quarter 2010 effective tax rate was primarily due to a decrease in domestic earnings, which are taxed at a higher rate than our foreign earnings.
Cash and short-term investments were $208.6 million at September 30, 2010, which is approximately $20 million higher than balances at June 30, 2010 due to strong operating cash flow.
Energy & Chemicals ("E&C") segment sales declined 23% to $38.2 million for the third quarter of 2010 compared with $49.7 million for the same quarter in the prior year as we completed several large higher margin projects during 2009. As expected, E&C gross profit margin declined in the 2010 quarter to 23.4% compared with 29.1% in the same quarter in 2009. However, third quarter margins did improve by about 4% from the first half of 2010 due to several expedited orders in our brazed aluminum heat exchanger product line. In addition, margins are beginning to improve in the systems product line as we ramp up production on several projects.
Distribution and Storage ("D&S") segment sales increased by 14% to $65.0 million for the third quarter of 2010, compared with $57.1 million for the same quarter in the prior year. The increase in sales was largely due to improved volume in China and in packaged gas systems in the U.S. as well as the recently completed Cryotech acquisition. D&S gross profit margin improved to 30.2% in the quarter compared with 27.7% a year ago largely due to improved volume and mix.
BioMedical segment sales improved 64% to $36.0 million for the third quarter of 2010, compared with $21.9 million for the same quarter in the prior year. The increase was largely due to the acquisition of Covidien's oxygen therapy business, which closed in fourth quarter 2009. BioMedical gross profit margin declined to 39.5% compared with 41.4% for the same period in 2009 largely due to a stronger euro in the 2009 period. Restructuring charges associated with the announced Plainfield, Indiana facility shutdown during 2010 and the Denver, Colorado facility shutdown during 2009 impacted margins in both periods by about 2%.
We continue to see an improving global market in all of our business segments. Bid activity remains very strong, especially in our E&C business, as demonstrated by a $22 million order received by the E&C Systems business for a natural gas liquids project in the Middle East during October 2010, which will be reflected in fourth quarter orders.
Based on year to date results, current order backlog, and business expectations, the Company is revising upward its full year earnings guidance. Sales for 2010 are expected to be in the range of $540 to $555 million, which is within the upper end of the previously provided sales range of $530 to $560 million. Diluted earnings per share are now expected to be in a range of $0.60 to $0.70 per share due to improving margin performance, as compared with the Company's prior guidance of $0.40 to $0.60 per diluted share, based on approximately 29.2 million weighted average shares outstanding. This revised guidance includes the impact of approximately $0.15 per diluted share for restructuring and acquisition related costs, as well as the write-off of deferred financing costs associated with the refinancing of our Senior Credit Facility. Excluding these charges, full year 2010 earnings would be expected to fall in a range of $0.75 to $0.85 per share.
Certain statements made in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning the Company's plans, objectives, future orders, revenues, earnings or performance, liquidity and cash flow, capital expenditures, business trends, and other information that is not historical in nature. Forward-looking statements may be identified by terminology such as "may," "will," "should," "expects," "anticipates," "believes," "projects," "forecasts," "outlook," "guidance", "continue," or the negative of such terms or comparable terminology. Forward-looking statements contained in this news release or in other statements made by the Company are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control, that could cause the Company's actual results to differ materially from those matters expressed or implied by forward-looking statements. These factors and uncertainties include, among others, the following: the cyclicality of the markets that the Company serves and the vulnerability of those markets to 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 and changes in government energy policy; competition, including enhanced competitive pressures resulting from the economic downturn; 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; 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 loss of key employees and deterioration of 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; 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 hurricanes and other severe weather; litigation and disputes involving the Company, including product liability, contract, warranty, pension, intellectual property and employment claims; and volatility and fluctuations in the price of the Company's stock. For a discussion of these and additional factors that could cause actual results to differ from those described in the forward-looking statements, see the Company's filings with the Securities and Exchange Commission, including Item 1A (Risk Factors) in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, which should be reviewed carefully. The Company undertakes no obligation to update or revise any forward-looking statement.
Chart is a leading global manufacturer of highly engineered equipment used in the production, storage and end-use of hydrocarbon and industrial gases. The majority of Chart's products are used throughout the liquid gas supply chain for purification, liquefaction, distribution, storage and end-use applications, the largest portion of which are energy-related. Chart has domestic operations located across the United States and an international presence in Asia, Australia and Europe. For more information, visit: .
As previously announced, the Company will discuss its third quarter 2010 results on a conference call on Thursday, October 28, 2010 at 10:30 a.m. ET. Participants may join the conference call by dialing (877) 407-4134 in the U.S. or (201) 689-8430 from outside the U.S. A live webcast presentation will also be accessible at 10:30 a.m. ET at . Please log-in or dial-in at least five minutes prior to the start time.
A taped replay of the conference call will be archived on the Company's website, , approximately one hour after the call concludes. You may also listen to a taped replay of the conference call by dialing (877) 660-6853 in the U.S. or (201) 612-7415 outside the U.S. and entering Account Code 356 and Pass Code 358267. The telephone replay will be available beginning approximately one hour after the end of the call until 11:59 p.m. ET, Wednesday, November 10, 2010.
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CONTACT: Chart Industries, Inc. Michael F. Biehl, Executive Vice President, Chief Financial Officer and Treasurer 216-626-1216 firstname.lastname@example.org Kenneth J. Webster, Vice President, Chief Accounting Officer and Controller 216-626-1216 email@example.com