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Chart Industries (GTLS) Acquires AdEdge, To Boost Earnings

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Chart Industries, Inc. GTLS yesterday announced that it acquired AdEdge Holdings, LLC for $40 million in cash. This is the company’s third buyout so far in 2021 and the second in the past three-four months, which enhances its offering in the clean water market.

Yesterday, Chart Industries’ shares gained 0.43%, ending the trading session at $187.44.

AdEdge is a specialist in providing technology and solutions, which help in removing or treating various contaminants from water. The water treatment solutions and equipment are used by a wide customer base in 17 countries.

It has a facility in Duluth, GA, wherein designing, engineering and assembling are done. Revenues expanded 35% (CAGR) from 2017-2020, while the gross margin grew 3 percentage points to 35%.

Inside the Headlines

As noted, Chart Industries intends on integrating AdEdge with its ChartWater division within the Specialty Products segment. ChartWater is a newly formed division that works for providing solutions for treating water. It includes operations of BlueInGreen — a provider of water treatment solutions, which was acquired by Chart Industries in November 2020.

With the addition of AdEdge, Chart Industries is well-positioned to leverage benefits from its extended product and solution offerings (including those related to PFAS and PFOS treatment), customer base, and technological know-how. Treatment processes offered by AdEdge include membrane technology, adsorption, filtration and biological treatment. Resi water systems, chemical feed systems, modular systems and packaged units are among its product offerings.

Chart Industries also anticipates a boost to its aftermarket presence, providing media replacement, spare parts, ancillary equipment and equipment upgrades, along with better services and repair offerings. AdEdge’s skilled team of around 50 people are likely tailwinds too.

The AdEdge buyout is anticipated to be immediately accretive to Chart Industries’ earnings per share. For 2022, the company expects the acquisition to generate revenues of $35-$40 million and boost its adjusted earnings by 11-16 per share.

Chart Industries’ Buyout Activities

The company believes in acquiring businesses/assets in an attempt to gain access to new customers, regions and product lines. In the first half of 2021, Chart Industries’ investments on acquisitions, net of acquired cash, amounted to $55 million.

In July 2021, the company acquired L.A. Turbine — a designer and manufacturer of turboexpander. The buyout was valued at $80 million in cash. Also, in February, Chart Industries purchased Cryogenic Gas Technologies, Inc. in a $55-million cash transaction.

Zacks Rank, Price Performance and Earnings Estimate Trend

With a market capitalization of $6.8 billion, Chart Industries currently carries a Zacks Rank #3 (Hold). The company is poised to benefit from solid orders and backlog as well as investments in growth opportunities and synergistic gains from buyouts. Headwinds from supply-chain constraints and a hike in raw materials might be concerning.

In the past three months, the company’s shares have gained 25.7% against the industry’s decline of 1.8%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Chart Industries’ earnings is pegged at $3.88 for 2021 and $5.64 for 2022, reflecting no change and growth of 2.7% from the respective 60-day-ago figures. The consensus estimate for the third quarter has been decreased by 10.1% to 98 cents in the same timeframe.

Chart Industries, Inc. Price and Consensus

Chart Industries, Inc. Price and Consensus
Chart Industries, Inc. Price and Consensus

Chart Industries, Inc. price-consensus-chart | Chart Industries, Inc. Quote

Stocks to Consider

Three better-ranked stocks in the industry are Helios Technologies, Inc. HLIO, Kadant Inc. KAI and Applied Industrial Technologies, Inc. AIT. While both Helios and Kadant currently sport a Zacks Rank #1 (Strong Buy), Applied Industrial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these companies improved for the current year. Also, earnings surprise in the last reported quarter was positive 39.53% for Helios, 33.11% for Kadant and 27.97% for Applied Industrial.

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