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Chart Outperforms in 4Q - Analyst Blog

By: Zacks.com
Posted: 3/5/2013 1:39:00 PM
Referenced Stocks: AIMC;GDI;GTLS;NPO

Chart Industries Inc. ( GTLS ), an engineered equipment manufacturer for industrial gases, posted strong results for the fourth quarter and full-year 2012. Chart posted earnings of 80 cents per share, increasing 56.9% year over year.

The fourth quarter 2012 earnings were adjusted for the AirSep Corporation acquisition costs, whereas fourth quarter 2011 earnings were adjusted for the refinancing and restructuring costs. Earnings also surpassed the Zacks Consensus Estimate of 76 cents by 5.3%. Strong segmental sales as well as contribution from acquisition of AirSep Corp., medical and industrial air separation equipment manufacturer, helped the increase.

In 2012, earnings per share were reported to be $2.50, increasing 35.9% year over year.

Revenue: In the fourth quarter of 2012, total sales were $303.9 million, up 38.3% from the $219.6 million reported a year ago. Sales also surpassed the Zacks Consensus Estimate of $278.0 by 9.3%. The increase in earnings was a result of a rise in sales across the Energy & Chemicals (E&C) and Distribution & Storage (D&S) segments. 

In 2012, Chart reported sales of $1.0 billion, increasing 27.6% from the revenue of $794.6 million in 2011.

Energy and Chemicals segment increased 70.4% with sales of $94.8 million, resulting from higher volumes. Distribution & Storage segment increased 21.8% with sales of $139.3 million, also due to increased volumes. Volume increase was as a result of increased LNG equipment shipments in the quarter. BioMedical segment sales increased 40.6% with sales of $69.8 million, primarily as a result of the AirSep acquisition as well as lower volume and mix.

Margins: Chart reported total gross profits of $85.5 million, increasing 33.5% over the year-ago quarter. However, gross margin decreased by 100 basis points year over year to 28.1%, due to lower margins in the BioMedical segment.

The E&C segment faced a 620 basis points increase in the gross margin, standing at 31.0%. Also, the D&S segment experienced a 290 basis points increase due to better volumes, standing at 29.5%.

However, BioMedical segment's gross margin of 21.5%, pulled down the total gross margin. The segment faced a tremendous decline of 1,840 basis points, due to higher restructuring costs and lower volumes.

Balance Sheet/Cash Flow: Exiting the fourth quarter 2012, Chart's cash and cash equivalents were $141.5 million, compared with $105.8 million in the preceding quarter. Total long-term debt was recorded at $252.0 million, against $250.6 million in the quarter ending September 2012.

For the quarter, cash flow from operations was recorded at $73.2 million, increasing from the $44.6 million recorded in the year-ago quarter. Capital expenditures were $14.7 million, against $7.2 million in the fourth quarter of 2011.

Outlook: Management believes that the huge backlog at the end of 2012 will translate into higher revenues in the coming fiscal year. It is also expected that demand for natural gases will increase in regions such as China and North America in the future. However, the BioMedical business will continue to face headwinds in the European markets as well as the US.

Based on these factors, sales for 2013 are expected to be in the range of $1.2 billion to $1.3 billion, more than the $1.0 billion generated in 2012. Also, earnings per share are expected to lie between $3.00 and $3.40.

The stock currently holds a Zacks Rank #5 (Strong Sell). Other stocks worth a look in the industry are Altra Holdings Inc. ( AIMC ) and EnPro Industries Inc. ( NPO ); both holding a Zacks Rank #1 (Strong Buy). Also, Gardner Denver Inc. ( GDI ) holds a Zacks Rank #2 (Buy).



ALTRA HOLDINGS (AIMC): Free Stock Analysis Report

GARDNER DENVER (GDI): Free Stock Analysis Report

CHART INDUSTRIE (GTLS): Free Stock Analysis Report

ENPRO INDUS INC (NPO): Free Stock Analysis Report

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