CHART INDUSTRIES INC (GTLS)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered solid top-line and margin expansion: sales $1.00B (+6.6% organic), gross margin 33.9% (+210 bps YoY), adjusted operating margin 19.9% (+190 bps), and adjusted EPS $1.86; orders were $1.32B (+17.3%) and backlog reached a record $5.14B .
• Versus consensus: Adjusted EPS and EBITDA were beats while revenue was essentially in line; Q2 setup points to typical seasonality and book-to-bill >1.0, with guidance reiterated for FY 2025 (revenue $4.65–$4.85B, adj. EBITDA $1.175–$1.225B, adj. EPS $12.00–$13.00) .
• Management highlighted tariff mitigation actions (gross annual impact ~$50M before mitigations) and emphasized resilience from aftermarket (RSL ~1/3 of revenue) and a robust LNG and data center pipeline as demand drivers .
• Stock-reaction catalysts: guidance reiteration despite tariff overhang, data center pipeline acceleration ($400M next 12–18 months), LNG pipeline ($1B next 12 months), and record backlog; focus remains on deleveraging to sub-2.5x net leverage in 2025 .

What Went Well and What Went Wrong

• What Went Well

  • Broad-based demand and record backlog: Orders $1.32B (+17.3%) with strength in nuclear, space, marine, HLNG vehicle tanks; backlog first time above $5B .
  • Margin expansion and disciplined cost: gross margin 33.9% (fourth consecutive quarter ≥33%), SG&A at 14.1% of sales; adjusted operating margin up 190 bps YoY .
  • Data center and LNG momentum: “pipeline of potential customers… over 50” and ~$400M near-term data center pipeline; LNG-specific pipeline ~$1B expected to enter backlog within 12 months .

• What Went Wrong

  • Negative free cash flow in Q1 due to seasonal cash uses (interest, insurance, bonuses): FCF -$80.1M .
  • CTS softness YoY and RSL margin mix: CTS sales -4.1% YoY (though sequentially +2.0%); RSL gross margin -200 bps on lower high-margin spares mix vs prior year .
  • Tariff uncertainty: communicated gross annualized impact of ~$50M before mitigations; management is implementing regional sourcing, price increases, and exemptions .

Financial Results

Actual vs Wall Street consensus (S&P Global):

Values retrieved from S&P Global.*

Segment performance

KPIs and order/backlog

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We delivered strong order and organic sales growth… fourth consecutive quarter of reported gross profit margin above 33%… focus on debt paydown… target net leverage ratio of sub 2.5 in 2025.” — CEO Jill Evanko .
• “Our commercial pipeline remains robust at approximately $24 billion… meaningful pipeline of potential large global LNG work… significant likelihood to come into backlog in 2025.” — CEO .
• “Data centers and AI continue to be a driver… pipeline… has expanded to approximately $400 million of opportunities.” — CEO .
• “Gross annual estimated impact from tariffs… approximately $50 million… mitigating actions underway.” — CEO .
• “Second half 2025 will be higher than first half… timing of specific project revenue and service work in backlog.” — CEO .

Q&A Highlights

• Tariff exposure and mitigation: Manufacturing largely in U.S. with raw material tariffs manageable; regional supply strategy and flexible manufacturing enable offsets; guidance assumes mitigations are effective .
• Seasonality and Q2 setup: No change from historical pattern; margin progression expected in typical seasonal cadence; tax payments heavier in Q2 and Q4 .
• Data center opportunity: Pipeline accelerated to ~$400M over 12–18 months; beyond air coolers, cryogenic cooling, fans and adjacent water/carbon capture solutions discussed .
• LNG momentum: Management seeing acceleration; ~$1B LNG pipeline next 12 months ex-Mozambique Rovuma content already anticipated; NRU interest rising with gas composition needs .
• Aftermarket resilience: Mission-critical installed base supports steady maintenance; backlog within RSL provides visibility even in uncertainty .

Estimates Context

• Q1 2025 actuals vs consensus: Adjusted EPS $1.86 vs $1.83* (beat), revenue $1.00B vs $1.00B* (in line), adjusted EBITDA $231.1M vs $226.3M* (beat). Values retrieved from S&P Global.*
• Q2 2025 forward context: Consensus implied sequential growth typical of seasonality; management expects book-to-bill >1.0 and second half > first half .

Key Takeaways for Investors

• Backlog and orders underpin 2025 visibility: Record backlog $5.14B and broad-based orders ($1.32B) support reiterated FY 2025 guide despite tariff uncertainty .
• Margin trajectory remains positive: Gross margin 33.9% and adjusted operating margin 19.9% reflect SG&A leverage and CBE productivity; specialty segment back above 30% gross margin .
• Aftermarket durability offsets cycle risk: RSL ~1/3 revenue and ~half 2024 adjusted operating income; LTSA growth (+10.7%) and e-commerce adoption enhance resilience .
• Structural growth drivers: Data center pipeline ($400M) and LNG pipeline ($1B) should drive HTS and specialty conversion through 2H25 and into 2026 .
• Tariff impact appears manageable: Gross ~$50M annualized pre-mitigation with active pricing, exemptions, and regional sourcing—guide maintained .
• Deleveraging on track: Net leverage 2.91x in Q1; company reiterates sub-2.5x in 2025 and ~$3B YE net debt on $550–$600M FCF .
• Near-term trading: Positive skew from guidance reiteration and LNG/data center catalysts; watch CTS demand recovery, RSL spare mix normalization, and tariff headlines .

Additional Relevant Q1 2025 Press Releases

• Blue Spruce Dry Piney NRU and helium project selection (front-end engineering completed; large-scale helium/natural gas/CO2 sequestration scope) .