Chart Industries Reports 2008 Third Quarter Results
biz.yahoo.com
Friday October 31, 6:00 am ET
CLEVELAND, Oct. 31, 2008 (GLOBE NEWSWIRE) -- Chart Industries, Inc. (NasdaqGS: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, 2008. Highlights include:
* Sales up 15% to $188.8 million
* Net income up 68% to $20.4 million, or $0.70 per diluted share
* Gross profit margin improves to 35%
* Maintains full-year earnings per share guidance
Net sales for the third quarter of 2008 increased 15% to $188.8 million from $163.7 million in the comparable period a year ago. Gross profit for the third quarter of 2008 was $66.2 million, or 35.0% of sales, versus $45.4 million, or 27.7% of sales, in the comparable quarter of 2007.
Net income for the third quarter of 2008 was $20.4 million, or $0.70 per diluted share. This compares with third quarter 2007 net income of $12.1 million, or $0.42 per diluted share. The third quarter of 2008 included $0.5 million in non-recurring costs, or $0.01 per diluted share, relating to the repurchase and retirement of $6.8 million of the Company's 9-1/8% Senior Subordinated Notes. As a result, net interest expense is expected to be reduced by approximately $0.5 million annually going forward.
``We are very pleased with our third quarter operating results as evidenced by the significant margin improvement across the majority of our business segments,'' stated Sam Thomas, Chart's Chairman, President and Chief Executive Officer. ``Project execution and improved throughput at our Energy & Chemicals (''E&C``) segment, as well as performance incentives, contributed to the overall margin expansion during the period.''
Backlog at September 30, 2008 was $461.8 million, 8% greater than the September 30, 2007 level of $426.1 million, and 7% lower than the backlog of $498.1 million at June 30, 2008. Orders for the third quarter of 2008 were $163.8 million compared with second quarter 2008 orders of $227.1 million. ``E&C orders fluctuate due to project size, and it is not unusual to see order intake vary significantly from quarter to quarter,'' continued Mr. Thomas.
Selling, general and administrative (``SG&A'') expenses for the third quarter of 2008 were $26.8 million, or 14.2% of sales, compared with $20.9 million, or 12.8% of sales, for the same quarter a year ago. The increase in SG&A expenses was primarily the result of higher employee-related and infrastructure costs to support the Company's business growth over the past few years.
Net interest expense and financing costs amortization for the third quarter of 2008 was $5.2 million compared with $5.5 million for the same quarter a year ago, reflecting lower interest rates on the Senior Credit Facility and greater interest income associated with higher cash balances. This was partially offset by the $0.5 million in non-recurring costs associated with the Senior Subordinated Note repurchases during the third quarter.
Cash provided by operations for the three months ended September 30, 2008 was $59.6 million compared with cash provided by operations of $45.8 million for the three months ended September 30, 2007. The increase was primarily due to higher net income and customer advances due to the timing of progress billings under existing contracts. Cash used in financing activities for the three months ended September 30, 2008 was $6.3 million, which included $6.8 million for the Senior Subordinated Notes repurchase, compared to cash provided by financing activities of $5.7 million for the same period in 2007.
``The Company ended the quarter with a very strong balance sheet,'' stated Mr. Thomas. ``Our cash position of $149 million, together with our existing credit agreements provides us with the liquidity to comfortably meet our working capital requirements and support continued growth.''
The Company's total debt at the end of the third quarter of $243.2 million consists of $80 million of Term Debt under its Senior Credit Facility, due in 2012, and $163.2 million of Senior Subordinated Notes, due in 2015, with no principal payments required on either commitment prior to those dates. The Company has in excess of $76 million available on its current revolving credit facility, which extends to the fourth quarter of 2010.
SEGMENT HIGHLIGHTS
E&C segment sales improved by 35% to $78.9 million for the third quarter of 2008, compared with $58.4 million for the same quarter in the prior year. This increase is primarily attributable to improved throughput for both brazed aluminum and air cooled heat exchangers as well as flow-through of our backlog growth over the past year. E&C gross profit margin increased to 39.2% in the 2008 period compared with 22.4% in the 2007 quarter primarily due to favorable project mix and improved execution. Performance incentives and change orders were earned on several projects, which contributed to the improved margins during the quarter.
Distribution & Storage (``D&S'') segment sales for the third quarter of 2008 were essentially the same at $85.0 million, compared with $85.1 million for the third quarter of 2007. Lower volume in bulk tanks was mostly offset by higher volume in packaged gas systems as well as benefits from a small acquisition in Germany made in the second quarter. In addition, quarterly D&S segment sales benefited from stronger foreign currencies against the U.S. dollar compared with the prior-year's quarter. D&S gross profit margin of 30.9% in the quarter was comparable to its margin of 30.8% a year ago.
BioMedical segment sales for the quarter increased to $24.9 million from $20.2 million for the same quarter in the prior year. Medical respiratory product sales increased $2.2 million primarily due to continued growth in European markets, while biological storage systems sales increased $2.3 million due to higher volume in domestic and international markets. BioMedical gross profit margin increased to 36.1% in the quarter compared with 30.2% for the same period in 2007. This was primarily due to higher prices and more favorable product mix as well as favorable currency impact from euro-denominated sales.
OUTLOOK
Based on year to date results, current order backlog, and fourth quarter expectations, the Company is reaffirming its previously announced earnings per share guidance, but is slightly adjusting its sales forecast. Sales for 2008 are now expected to be in the range of $750 to $770 million, versus the prior forecast of $770 to $800 million. Full year earnings per share are still expected to be in the range of $2.55 to $2.65 per diluted share, on approximately 29.1 million weighted average shares outstanding.
``We expect the credit crisis, slowing industrial activity and emerging forecasts of reduced global GDP to have an impact on new project timing, which we will incorporate into our planning process for 2009,'' stated Mr. Thomas. ``However, we currently have sufficient backlog to give us good visibility into the third quarter of next year.''
``We have an experienced management team that has previously managed through difficult business cycles, as well as periods of significant growth. Based on our flexible, experienced workforce, strong competitive position and good relationships with our customers and suppliers, we are confident that we will come through these uncertain times with an even stronger and more successful business,'' Mr. Thomas concluded. |
