Chart Industries has reported lower sales volume across all of its product lines in its third-quarter financial results ending 30th September, 2016, stifled by the continued and challenging conditions of energy markets.
Net sales decreased 22.8% to $203m from $264m in the comparable 2015 period, but gross profit reached $69.6m, or 31.4% of sales, which the company explains was favourably impacted by the insurance recovery costs related to its BioMedical business.
Overall, its Distribution & Storage (D&S) outfit continued to see a good order flow for downstream LNG terminals in Europe as well as securing new orders in its Lifecycle business, although its results were negatively impacted by the continued energy market slowdown seen in its Energy & Chemicals (E&C) business.
Orders received in the third quarter totalled $201m – a decrease of $69m over orders received during the second quarter of 2016 which included a number of large awards within all three of the company’s reporting segments.
Nonetheless, cash and short-term investments of $267m increased by $54m since 30th June due to a strong operating cash flow generation.
Sales in its E&C segment declined by 69.8% to $23.7m compared with $78.4m for the prior-year quarter, with gross profit margins also dropping from 23.4% to 7.6%. Chart attributed the decline to low volumes and competitive market conditions.
Despite sales in its D&S segment also decreasing by 2.3% to $126.6m, gross profit margins in the unit were up, reaching 26.4% compared to 23.9% in the prior-year quarter due to lower restructuring costs and improved throughput. Chart also explained that revenues in LNG applications were down this quarter in the US and Asia, reflecting continued downstream LNG activity.
Due to lower revenues in respiratory and commercial oxygen (O2) generation, sales in Chart’s BioMedical segment also took a hit, declining by 4.5% to $53.6m compared to $56.1m in the comparative quarter of 2015. However, gross profit margin increased to 64.2% compared to 33.8% in the prior-year quarter, driven by insurance recovery related to warranty costs for certain product lines acquired during Chart’s takeover of AirSep Corporation in 2012 – adding 28.3% to the margin in the current quarter.
As a result of its year-to-date results, Chart has narrowed its total 2016 sales target to around $850m, but Chart’s Chairman and CEO Sam Thomas remained enthusiastic about the company’s outlook, “We are focusing heavily on our operations, implementing further productivity improvements and identifying profit-driven initiatives to better position ourselves.”
“In addition, our strong balance sheet gives us significant flexibility to pursue some exciting organic and inorganic investment opportunities to grow our business,” he signified.