While highlight a strong operating cash flow of $38 million, noting several cost-cutting measures beginning to pay off and Chart Thermax’s contract for LNG vaporizers for an import terminal in India, Chart Industries reported first quarter 2016 results that showed a net loss of $4.7 million, or $0.15 per diluted share, for the first quarter of 2016.

Net sales for the first quarter of 2016 were down 20.9 percent to $193.8 million from $245.1 million in the comparable period a year ago. Gross profit for the first quarter of 2016 was $52.7 million, or 27.2 percent of sales, versus $72.5 million, or 29.6 percent of sales, in the comparable quarter of 2015.

Energy and Chemicals

Energy and Chemicals (E&C) segment sales decreased 56.6 percent to $38.0 million for the first quarter of 2016 compared with $87.5 million for the same quarter in the prior year. The decline was due to lower sales volume seen across all product lines in natural gas, petrochemical, and LNG applications. A number of large projects were also completed in 2015, resulting in lower current quarter revenues. E&C gross profit margins were 14.4 percent in the 2016 quarter compared with 28.4 percent in the same quarter of 2015. Gross profit margins were negatively impacted as a result of lower throughput and highly competitive markets.

Distribution and Storage

Distribution and Storage (D&S) segment sales increased 2.3 percent to $107.5 million for the first quarter of 2016 compared with $105.1 million for the same quarter in the prior year. Sales in North America increased as a result of revenue recognized on projects related to both LNG and industrial gas applications. This increase was partially offset by continued weakness in Asia.

We continue to demonstrate the strength of our diversified product portfolio and strong cash flow generation despite low energy prices and a weak Chinese economy.

D&S gross profit margins were 27.4 percent compared with 28.6 percent in the prior year quarter. Severance costs of approximately $1.8 million negatively impacted D&S gross margin, while the finalization of an insurance claim positively impacted margins by approximately $1.0 million. Excluding these one-time adjustments, D&S gross profit margin would have been 28.1 percent.

BioMedical

BioMedical segment sales decreased 8.1 percent to $48.3 million for the first quarter of 2016 compared with $52.6 million for the same quarter in the prior year. The decrease is primarily due to lower respiratory sales volumes in North America and the timing of expected orders in Europe, partially offset by an increase of new product revenues in life sciences. BioMedical gross profit margin increased to 36.9 percent in the quarter compared with 33.5 percent for the same period in 2015 primarily due to product mix and lower warranty costs.

Looking long-term

“We are pleased with demand strength for our LNG-related products in Distribution & Storage (“D&S”), including our contract for LNG vaporizers for an import terminal in India,” said Sam Thomas, Chart’s Chairman, President and CEO. “Our D&S business is benefiting from greater availability of LNG worldwide, some of it coming from plants that Energy & Chemicals (‘E&C’) has been helping to build.”

“Despite the loss, which was largely due to acceleration of share-based compensation expense in the quarter, we continue to demonstrate the strength of our diversified product portfolio and strong cash flow generation despite low energy prices and a weak Chinese economy.”

“We are focused on our long-term strategic initiatives and maintaining our engineering and execution capabilities, particularly in E&C. The startup of our new E&C LifeCycle aftermarket service business to serve the significant installed base of E&C equipment is a prime example of how we plan to capitalize on our strengths by providing a well balanced portfolio of products and services. Lean initiatives, including our plant consolidation in Tulsa, Oklahoma, will allow us to improve our manufacturing efficiencies to reduce future costs.”

Thinking ahead

Based on first quarter results, current order backlog and business expectations for the remainder of 2016, Chart is reiterating its 2016 guidance with sales expected to be in the range of $900 million to $1.0 billion. Full year earnings per diluted share are still expected to be in the range of $0.50 to $1.00 per share, on approximately 30.9 million weighted average shares outstanding. This excludes the impact from any restructuring costs and assumes an annual effective tax rate of approximately 29 percent.