Chart Industries, Inc. has reported its results for the third quarter ended 30th September 2017, including an added $6.1m in sales and 20% operating income margin from the completed Hudson acquisition.
Net income for Q3 of 2017 was $1.5m and total sales for Q3 of 2017 increased to $240.5m from $238.2m in the second quarter of the year.
Market and order activity continues to increase year to date, with $258m in orders received in the quarter, inclusive of $3.8m of orders from Hudson in the ten-day Chart ownership period. Energy and Chemicals (E&C) orders in both the third quarter and the second quarter of 2017 were above $60m, and BioMedical orders were up 7.3% sequentially over the second quarter of 2017 driven by demand for oxygen concentrators.
Backlog excluding third quarter acquisitions increased to $390.6m from $367.2m at the end of the second quarter of 2017. We anticipate this sequential order trend will continue to increase through year end, with specific project orders expected in the E&C business and in Distribution and Storage (D&S) Asia related to LNG related product sales.
Natural gas demand in both petrochemical and LNG export projects continued to show strength in the third quarter. Specifically, activity related to equipment for cryogenic gas plant development has generated year-to-date orders of approximately $20m for Chart brazed aluminum heat exchanger content and additional air-cooled heat exchanger content.
Chart’s gross profit for the Q3 of 2017 was $70.4m, or 29.3% of sales, which was unfavorably impacted by $0.3m of restructuring costs. Gross profit included $2.2m from Hudson. Gross profit for the second quarter of 2017 was $63.2m.
Third quarter orders in E&C were $65.9m, inclusive of $3.8m from Hudson. This is the second quarter in a row with E&C order levels above $60m. Prior to the second quarter of 2017, the last time E&C had order levels above $60m was the third quarter of 2015. The natural gas and petrochemical markets continue to be strong, and LNG FEED and engineering activities are picking up. E&C segment sales of $46.6m ($40.5 million excluding Hudson) were organically flat to the second quarter of 2017 and up 71% versus the third quarter of 2016 (excluding Hudson).
D&S sales increased $1.8m to $139.3m compared to the Q2 of 2017, and $12.6m compared to the third quarter of 2016. US Packaged Gas, China industrial gas trailers and vaporization stations drove the favorability compared to both the prior quarter and the prior year. Chart anticipate the order and sales trend to continue to increase sequentially in the fourth quarter. D&S Selling, general and administrative (SG&A) of $18.6m is up $1.7m sequentially from the second quarter of 2017.
The company expects full year adjusted earnings per diluted share (non-GAAP) to be in the range of $0.75 to $0.90 per share, on approximately 31.3m weighted average shares outstanding. The capital expenditures for 2017 is expected to remain in the previously communicated range of $35m to $45m, inclusive of Hudson and VCT Vogel.
Bill Johnson, Chart’s CEO and President commented, “The Hudson and VCT Vogel acquisitions are strategic additions to our E&C and D&S segments, and we are pleased with the expanded aftermarket and service exposure that each brings, as well as the continued financial strength each has demonstrated.”
“Additionally, the results of our focused restructuring efforts are beginning to be seen both in improved gross margin and reduced SG&A. We expect continued sequential improvement in our SG&A cost structure, and incremental operating income improvement given our year to date order trends and current backlog levels,” he added.