Chart Industries, Inc. has reported a contrasted set of results for the second quarter ended June 30, 2016, with net sales down year-on-year but rises observed in both net income and gross profit.

Net sales for the second quarter decreased 8.6% to $247.1m from $270.3m in the comparable period a year ago.

But net income for the quarter was $21.2m, or $0.68 per diluted share, and would have been higher were it not for restructuring and acquisition-related costs. This compares with net income of $17.2m , or $0.56 per diluted share, for the second quarter of 2015.

The company also saw gains in gross profit, which stood at $87m in the second quarter (or 35.2% of sales) compared to a figure of $74.9m (27.7% of sales) in the same period last year.

All of which made for a ‘better than anticipated’ set of results for Chart Industries. Though Engineering & Construction (E&C) segment sales fell 33% compared to second quarter 2015, gross profit margins in this business improved due to various favourable factors of project execution and completion. In the Distribution & Storage (D&S) segment, rises were seen in both sales and gross profit, with sales in North America and Europe increased as a result of revenue recognized on projects related to both LNG and industrial gas applications.

Chart Chairman and CEO Sam Thomas reflected, “We delivered better than anticipated results in our Energy & Chemicals (E&C) segment through solid project execution, several short lead-time replacement equipment opportunities supported by our newly created LifeCycle aftermarket service offering, and contract expiration fees related to project development, which highlight our unique capabilities and competitive strengths.”

“The short lead-time shipments were a record in the quarter and eclipsed the prior record set in the fourth quarter of 2015.”

Thomas added, “We are focused on our working capital initiatives and are making good headway as we delivered another consecutive quarter with strong operating cash flow, despite continued weakness in energy markets. Our geographic and product diversification highlights further advantages to support continued cash flow generation. In July 2016, Bill Johnson joined us as President and COO, bringing operational and strategic talent that will help further these initiatives.”

Breakdown

Chart explained that orders received in the second quarter were $270.3m, an increase of $71.0m over orders received during the first quarter of 2016.

In addition to the typical seasonality of the business, order levels improved over the first quarter as Chart was awarded a number of significant projects across a variety of end markets within its Distribution & Storage (D&S) and BioMedical segments, including a $16m emerging energy application award and continued downstream LNG activity in D&S.

Backlog at June 30, 2016 was $392.5m, up 2.6% from the March 31, 2016 level of $382.4m.

E&C segment sales decreased 33.0% to $61.2m for the quarter, compared with $91.3m for the same quarter in the prior year; the decline was due to lower sales volume seen across all product lines given continued challenging energy market conditions. E&C gross profit margins were 52.1% in the 2016 quarter compared with 30.3% in the 2015 quarter; improved margins were due to multiple short lead-time shipments, contract expiration fees, Lifecycle aftermarket services, favorable execution and project completions during the quarter.

Meanwhile, D&S segment sales increased 6.4% to $129.6m for the second quarter, compared with $121.8m for the same quarter last year. Sales in North America and Europe increased as a result of revenue recognized on projects related to both LNG and industrial gas applications. D&S gross profit margins were 25.6% compared with 23.4% in the prior year quarter due to lower restructuring costs and improved volume in the current quarter.

BioMedical segment sales decreased 1.4% to $56.3m for the quarter, compared with $57.1m for the same quarter last year. The decrease is primarily due to lower revenues in North American respiratory and commercial oxygen generation, partially offset by an increase of new product revenues in life sciences and liquid oxygen revenues in Europe. BioMedical gross profit margin increased to 38.8% in the quarter compared with 32.8% for the same period in 2015, primarily due to product mix and lower warranty costs.

Outlook

Based on year-to-date results, continued weak order trends in E&C, and business expectations for the remainder of 2016, Chart has accordingly adjusted down its 2016 guidance – with sales now expected to be in the range of $850m to $900m. This compares with previous sales guidance of $900m to $1.0bn.