Chart Industries, the US LNG equipment maker, has reported mid-second quarter business activities, including new contracts and expenditure and cash flow details at its four divisions.
Chart said that net cash provided by operating activities for continuing operations amounted to $15.5 million and corresponding free cash flow included capital expenditures of $12.6M, driven by strong earnings, cash collections and supplier terms extensions.
The Atlanta-based company, listed on the Nasdaq global exchange, also completed a five-year long-term agreement with a major industrial gas customer for field services and repairs.
Chart said it signed an agreement with Risco Energy Solutions to provide LNG equipment to support the rapidly growing gas-to-power infrastructure in the Asian nation of Indonesia.
“April earnings per share and adjusted earnings per share after adding back severance costs were very strong, as our non-energy related businesses have continued to perform,” stated Jill Evanko, Chart’s President and Chief Executive.
“While the pandemic has altered 2020 for everyone, we are focused on shaping our business to deliver good results in 2020 and position Chart to take advantage of the strong fundamentals of the clean energy transition,” she added.
It also booked orders with 67 new customers in April and May and executed $11.9M of additional cost reductions on May 29, 2020, bringing year-to-date total annualized cost reductions to $60.7M.
“While the current economic situation continues to be challenging for our oil-related product lines, we continue to see demand for our equipment and solutions related to the transition to clean energy infrastructure and our specialty markets,” said Chart.
“With over $60M of cost reductions taken year-to-date, we continue to expect margin expansion throughout 2020 and strong free cash flow for the year, with debt paydown a priority,” it added.
Company free cash flow in April 2020 amounted to $12.6M.
“In the past two months, we have achieved payment term extensions with 311 suppliers with an average payment term extension of 38 days (new payment terms for those suppliers average 89 days)’” stated Chart.
The company second quarter orders through May 29 totaled about $135M, with orders in-house that will be booked in the first days of June totaling an additional $14M.
“In April and May, we received orders from 67 new customers, including 20 in China, where quarter-to-date orders and sales have exceeded our original 2020 plan,” stated the company.
Chart additionally reported demand for oxygen-related critical care products was strong in the month of April and in the first two weeks of May, while activity for traditional industrial gas applications has increased in the second half of May as the hyper-focus on oxygen delivery has subsided to pre-COVID-19 levels.
“We continue to see consistent and strong quoting and order levels for fueling stations, repair and service, small-scale LNG infrastructure and specialty markets, including the receipt of a $2.3M order for a European country’s Armed Forces,” the company revealed.
“We also expect to receive a small-scale terminal order in North America in June 2020,” it added.
In the E&C Cryogenics division, demand for quick turn refurbishment, repair and service-related product and services has increased over the past eight weeks, with orders of $7.2M associated with this type of work.
“Venture Global’s Calcasieu Pass big LNG project continues on schedule, and in May, we booked an additional $1M order related to the project,” said the company.
Chart said that areas that softened in the first two months of the second quarter 2020 included HLNG vehicle tanks, beverage tanks, and air-cooled heat exchangers.
“Air cooled heat exchanger orders quarter-to-date total $12.1M while the fans business continues to book and ship consistent with first quarter levels,” said the company.
Chart noted that the support of governments for the transition to clean energy fuels has heightened, with India extending excise duties on diesel, and Germany expected to extend the toll exemption for LNG heavy duty trucks on German highways in early June which will continue to incentivize companies to build infrastructure, including LNG fueling stations and additional over-the-road LNG trucks.
The company has also previously announced a letter of intent from Shell for 7 fueling stations in Germany and in May 2020, received the first purchase order for 2 of the 7 stations plus a surprise four station order that has not yet been booked from another customer.
Chart said that other regions, in particular Southeast Asia, continue to address their need for power infrastructure.
“One such country is Indonesia, and early in the second quarter 2020, we signed an agreement with Risco Energy Solutions, a private investment company, to provide LNG equipment such as Storage Tanks, ISO containers, Trailers, Mobile Equipment, and Fueling Stations, to support the rapidly growing Indonesian gas-to-power infrastructure needs,” it said.
Risco is an active gas infrastructure provider to PT Perta Gas Niaga, a subsidiary of the oil and gas company Pertamina.
“Given the weak demand for air-cooled heat exchangers and the continued optimization of our cost structure, we took further reductions on May 29, 2020,” said Chart.
The total cost reductions taken equaled $11.9M in annualized cost savings, bringing the year-to-date total to $60.7M of annualized cost savings.
“Of the $60.7M, approximately $51M are structural changes that can be maintained at volume levels above $1.6 billion,” the company stated.