Chart(US:GTLS)2025-10-29 20:03Financial Performance - Consolidated orders for Q3 2025 reached $1,680.4 million, up 43.7% from $1,167.5 million in Q3 2024, driven by higher orders in Specialty Products and Heat Transfer Systems [145]. - Total backlog as of September 30, 2025, was $6,049.5 million, compared to $4,535.3 million as of September 30, 2024, indicating strong demand [145]. - Consolidated sales for Q3 2025 were $1,100.6 million, a 3.6% increase from $1,062.5 million in Q3 2024, primarily due to growth in the Heat Transfer Systems segment [146]. - Consolidated gross profit margin for Q3 2025 remained flat at 34.1%, consistent with Q3 2024, as improved margins in Heat Transfer Systems offset declines in other segments [146]. - Gross profit for the third quarter of 2025 was $375.2 million, an increase of $12.6 million, or 3.5%, compared to $362.6 million in the same quarter of 2024, with a gross profit margin of 34.1% remaining flat year-over-year [151]. - Consolidated sales for the first nine months of 2025 increased by $130.9 million, reaching $3,184.4 million, driven by growth in Heat Transfer Systems and Specialty Products segments [163]. - Gross profit for the first nine months of 2025 rose by $62.0 million or 6.1%, with a gross profit margin of 33.9%, up from 33.3% in the same period of 2024 [164]. - Operating income for the consolidated entity decreased by $225.9 million to $233.3 million for the nine months ended September 30, 2025, reflecting a decline in profitability [162]. Mergers and Acquisitions - The proposed merger with Baker Hughes will result in Chart shareholders receiving $210.00 in cash per share, subject to certain conditions [128]. - Chart's stockholders approved the merger agreement with Baker Hughes on October 6, 2025, with completion pending satisfaction of other conditions [134]. - The merger agreement includes a reverse termination fee of $500 million payable to Chart if terminated under specific circumstances related to regulatory approvals [138]. - The company recorded a liability of $258 million for the termination fee paid by Baker Hughes related to the Flowserve merger agreement, reflecting potential repayment obligations [141]. - The Merger Agreement includes a termination fee of $250 million payable to Baker Hughes under certain circumstances [209]. - The company incurred transaction-related costs for the proposed merger with Baker Hughes and anticipates additional costs in the future [211]. Segment Performance - Operating income for the Heat Transfer Systems segment increased by $56.4 million, or 92.0%, to $117.7 million in the third quarter of 2025 compared to the same quarter in 2024 [149]. - For the third quarter of 2025, Heat Transfer Systems segment sales increased by $93.1 million, a 36.3% increase compared to the same quarter in 2024 [179]. - Heat Transfer Systems segment gross profit increased by $58.1 million, resulting in a gross profit margin of 38.5%, up from 29.8% in the prior year [179]. - Specialty Products segment sales decreased by $13.4 million, a 4.7% decline compared to the same quarter in 2024, primarily due to lower sales in hydrogen and HLNG vehicle tanks [188]. - Specialty Products segment gross profit decreased by $9.7 million, with a gross profit margin decline of 230 basis points to 24.0% [189]. - Repair, Service & Leasing segment sales decreased by $30.3 million, an 8.4% decline compared to the same quarter in 2024, driven by a large aftermarket equipment sale in the prior year [195]. - Repair, Service & Leasing segment gross profit decreased by $28.1 million, with a gross profit margin of 44.2%, down from 47.7% [196]. - Cryo Tank Solutions segment reported an operating income of $15.3 million, a decrease of $8.2 million, or 34.9%, compared to the same quarter in 2024 [149]. - Cryo Tank Solutions segment sales decreased by $27.4 million to $460.3 million for the first nine months of 2025, primarily due to lower industrial gas sales in the U.S. [176]. - Cryo Tank Solutions segment gross profit increased by $6.1 million, with a gross profit margin of 24.5%, up from 21.9% in the same period of 2024 [177]. - For the first nine months of 2025, Heat Transfer Systems segment sales increased by $165.4 million, a 22.2% increase compared to the same period in 2024 [183]. Expenses and Financial Metrics - Consolidated SG&A expenses increased by $12.4 million, or 9.1%, during the third quarter of 2025, primarily due to costs associated with the terminated merger with Flowserve and the proposed merger with Baker Hughes [152]. - SG&A expenses increased by $21.0 million or 5.1% during the first nine months of 2025, primarily due to costs associated with merger agreements and increased IT costs [165]. - Interest expense, net decreased by $3.5 million to $77.1 million for the three months ended September 30, 2025, compared to $80.6 million in the same quarter of 2024, mainly due to lower interest rates and reduced overall debt [154]. - Interest expense, net decreased by $16.2 million to $232.5 million for the nine months ended September 30, 2025, mainly due to lower interest rates and reduced debt [167]. - The effective income tax rate for the three months ended September 30, 2025, was 26.0%, compared to 26.5% for the same period in 2024 [156][157]. - The effective income tax rate for the nine months ended September 30, 2025 was 91.6%, significantly higher than the 24.7% rate for the same period in 2024 [169][170]. - The company expects no material impact on its effective tax rate or consolidated financial statements from the recent changes to the U.S. tax code enacted on July 4, 2025 [158]. Cash Flow and Backlog - Cash provided by operating activities for the nine months ended September 30, 2025, was $203.9 million, a decrease from $221.6 million in the same period in 2024 [205]. - The company's cash, cash equivalents, and restricted cash totaled $400.8 million at September 30, 2025, an increase of $90.3 million from December 31, 2024 [204]. - Cash used in investing activities was $70.8 million for the nine months ended September 30, 2025, a decrease from $121.6 million in the same period of 2024 [206]. - Cash used in financing activities was $53.9 million for the nine months ended September 30, 2025, compared to cash provided of $6.8 million in 2024 [207]. - The backlog as of September 30, 2025, was $6,049.5 million, an increase of 33.4% from $4,535.3 million as of September 30, 2024 [213]. - Orders for the Heat Transfer Systems segment increased to $760.8 million for the three months ended September 30, 2025, up from $424.7 million in the same period of 2024 [215]. - Specialty Products segment orders rose to $438.5 million for the three months ended September 30, 2025, compared to $237.8 million in the same quarter of 2024 [216]. - Repair, Service & Leasing segment backlog increased to $828.1 million as of September 30, 2025, from $593.4 million as of September 30, 2024 [218]. - The company expects to satisfy cash requirements for ongoing business with cash generated from operations and existing cash balances [208]. Macroeconomic and ESG Considerations - The company is actively monitoring macroeconomic impacts, including geopolitical instability and trade policies, but reported no material adverse effects on Q3 2025 results [143]. - Chart is committed to ESG performance, focusing on clean technologies and sustainability, with a report released in April 2025 [144]. - The company does not expect any balance sheet or cash impact from the co-investment agreement with BDT&MSD prior to 2028 [212].