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Edited Transcript of GTLS earnings conference call or presentation 27-Apr-17 2:30pm GMT

Thomson Reuters StreetEvents

Q1 2017 Chart Industries Inc Earnings Call

GARFIELD HEIGHTS Apr 28, 2017 (Thomson StreetEvents) -- Edited Transcript of Chart Industries Inc earnings conference call or presentation Thursday, April 27, 2017 at 2:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jillian C. Evanko

Chart Industries, Inc. - CFO and VP of Finance

* Samuel F. Thomas

Chart Industries, Inc. - Chairman and CEO

* William C. Johnson

Chart Industries, Inc. - President and COO

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Conference Call Participants

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* Eric Andrew Stine

Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst in the Equity Research department

* Jeffrey David Osborne

Cowen and Company, LLC, Research Division - MD and Senior Research Analyst

* Matthew A. Trusz

G. Research, LLC - Research Analyst

* Pavel S. Molchanov

Raymond James & Associates, Inc., Research Division - Energy Analyst

* Robert Duncan Brown

Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst

* Robert F. Norfleet

Alembic Global Advisors - MD and Senior Analyst

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Presentation

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Operator [1]

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Good morning, and welcome to the Chart Industries, Inc. 2017 First Quarter Conference Call. (Operator Instructions) As a reminder, today's call is being recorded. You should have already received the company's earnings release that was issued earlier this morning. If you have not received the release, you may access it by visiting Chart's website at www.chartindustries.com. A telephone replay of today's broadcast will be available following the conclusion of the call until Thursday, May 4.

The replay information is contained in the company's earnings release. Before we begin, the company would like to remind you that statements made during this call that are not historical, in fact, are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied in the forward-looking statements.

For further information about important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, please refer to the information regarding forward-looking statements and risk factors included in the company's earnings release and latest filings with the SEC. These filings are available through the Investor Relations section of the company's website or through the SEC's website, www.sec.gov. The company undertakes no obligation to update publicly or revise any forward-looking statements.

I would now like to turn the conference over to Jill Evanko, Chart Industries' CFO. You may begin your conference.

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Jillian C. Evanko, Chart Industries, Inc. - CFO and VP of Finance [2]

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Thank you, Jonathan. Good morning, everyone. I would like to thank you for joining us today. I will begin by giving you a brief overview of our first quarter results and outlook for 2017. Then Bill Johnson, President and COO, will provide comments on our current market and order trends as well as the progress of our restructuring activities in each of our businesses. Also on the call is Sam Thomas, our CEO, and he will provide summary commentary at the end of the call.

Net loss for the first quarter of 2017 was $2.9 million or negative $0.09 per diluted share. This included restructuring expenses from cost reduction initiatives in the quarter of approximately $4.6 million. Excluding these items, first quarter 2017 earnings would have been $0.01 per diluted share. This compares with a net loss of $3.3 million or negative $0.11 per diluted share for the fourth quarter of 2016, and a net loss of $4.7 million or negative $0.15 per diluted share for the first quarter of 2016.

On a comparable adjusted basis, fourth quarter 2016 adjusted EPS would have been breakeven and the first quarter of 2016 would have been negative $0.08 per diluted share.

Sales for the quarter were $204.1 million, an increase of 5.3% from the first quarter of 2016 with all 3 businesses' revenues growing over 5%. Net sales sequentially decreased by $10.3 million from the fourth quarter of 2016 as several LNG projects in the Distribution & Storage business in Europe did not recur in the first quarter.

Our gross profit for the quarter was $55.7 million or 27.3% of sales, including $2.5 million of restructuring charges. Gross profit for the fourth quarter of 2016 was $57.1 million or 26.6% of sales, inclusive of $900,000 of restructuring and other onetime charges.

Orders received in the first quarter totaled $209.7 million, an increase of 14% from fourth quarter 2016.

Sequentially, orders are up in all 3 businesses. The primary drivers of the $25.7 million increase over the fourth quarter of 2016 is strength across the business units, in particular in global packaged gas, LNG vehicle tanks, equipment for natural gas processing plants and Europe and Asia respiratory. Backlog at the end of the first quarter was $348.6 million, which is up from $342.6 million as of the end of 2016.

In addition to sequential growth in orders and backlog, we're also seeing increases in our order pipeline and quotation activity across our businesses.

E&C segment sales of $39.9 million for the first quarter increased $8.5 million or 27% from the fourth quarter of 2016 and increased 5% over the first quarter of the prior year. The increase was due to project execution, the addition of Hetsco to our LifeCycle business and revenue associated with the Bechtel FEED study for the Tellurian, Driftwood project.

Gross margins were 21.1% in the quarter compared with 18.3% in the fourth quarter of '16 and 14.4% in the first quarter of 2016. The increase in margins is primarily driven by the cost reductions taken in the business both in the U.S. and China.

In our D&S business, first quarter sales of $113.3 million was an increase of $5.8 million compared to the first quarter of 2016 and a decrease of $20.1 million sequentially from the fourth quarter of 2016.

We continue to see strength in our U.S. packaged gas business and LNG vehicle tanks products. The D&S gross margin of 27% is a sequential increase of 130 basis points over the fourth quarter of 2016 and was down slightly from the prior year first quarter, driven primarily by last year's onetime favorable insurance settlement of $1 million.

In BioMedical, sales increased 5.5% year-over-year to $51 million, primarily due to global growth of 11% in our respiratory business. BioMedical revenues were up sequentially by $1.4 million from the fourth quarter of 2016. BioMedical gross profit margin of 32.7% in the quarter included restructuring expenses of $2.1 million for the closure of the Buffalo respiratory manufacturing facility, which is complete as of March 31.

On a comparable basis, excluding restructuring, gross margins for the BioMedical business increased from 36.3% to 36.9% sequentially, resulting from favorable product mix in the quarter.

SG&A expense for the quarter was $52.4 million, up $400,000 over Q4 2016. The increase in SG&A is related to higher share-based compensation expenses, $2.2 million of restructuring expenses related to our corporate office relocation, the BioMed Buffalo move and the China footprint consolidation.

SG&A in the first quarter also includes the addition of our Hetsco acquisition. The fourth quarter of 2016 included $3.8 million in restructuring costs. We expect to see a reduction to our second quarter and second half BioMed and total company SG&A resulting from the completion of the Buffalo respiratory move and lower share-based compensation expenses.

Moving to our outlook for the remainder of the year. Our first quarter order intake and improved signs of recovery in our energy-related markets, combined with our previously announced restructuring activities, supports our prior full year guidance. We continue to expect sales for 2017 to be in the range of $875 million to $925 million and full year adjusted earnings per diluted share to be in the range of $0.60 to $1 on approximately 31.3 million weighted average shares outstanding.

This excludes the impact from any restructuring costs and assumes a full year 2017 tax rate of 34%. The company anticipates further improvement to the effective tax rate irrespective of the outcome of the potential U.S. tax code changes. These improvements will be driven by the completion of the Chinese facility consolidations and a return to profit levels in that region.

We estimate our capital expenditures for 2017 to be in the range of $35 million to $45 million. I will now turn the call over to Bill Johnson.

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William C. Johnson, Chart Industries, Inc. - President and COO [3]

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Thank you, Jill, and good morning, everyone. I will now discuss the results and trends in each of the business segments. During the first quarter, our Energy & Chemicals business booked $38 million in orders, which is up from fourth quarter 2016 orders of $20.5 million. Backlog at the end of the quarter was $98 million, which is down from the prior quarter's backlog of $99.8 million, primarily driven by the successful completion of large projects.

We saw strong first quarter orders in our brazed aluminum and air cooled heat exchanger products, primarily related to cryogenic gas plants. Equipment orders for 8 plants were received in the first quarter. With the increase in drilling in the Permian and SCOOP and STACK basins, we're seeing more associated gas. This is driving an increase in the supply of ethane, which when coupled with $50 to $55 oil makes ethane an attractive feedstock for ethylene crackling. Along with more gas processing equipment needs, it also translates into an increase in propane and butane dehydrogenation-related activities.

Additionally, our IPSMR technology is generating a high level of interest, in particular in the midscale LNG plant size. In March, we booked the Tellurian, Driftwood FEED study and anticipate further interest in the year related to this proprietary technology.

In addition to the growth in orders and revenue within E&C, the gross margin improvement reflects the efforts related to restructuring in both domestic locations as well as the nearly complete consolidation of our Wuxi, China facility. We anticipate completing the consolidation of Wuxi brazed aluminum heat exchangers by the end of the second quarter.

Lastly, our recently acquired Hetsco business continues to be successfully integrated into our LifeCycle business and is on track to achieve the positive financial performance anticipated at acquisition. In our Distribution & Storage business, we booked orders of $120 million in the first quarter, up 4.7% from our fourth quarter 2016 orders of $114.6 million.

Order strength in the quarter was driven by U.S. packaged gas, industrial gas railcar orders and LNG vaporization stations in Asia. Backlog for the quarter increased from $218.2 million at the end of the fourth quarter to $225 million.

Within Distribution & Storage Asia, our orders for industrial packaged gas increased by 28% compared to Q1 2016.

With the increased volumes and the plant consolidation later this year, we expect to see margin levels improve in Asia. While we continue to monitor the possibility of a negative impact of customer consolidation within Distribution & Storage U.S., we continue to see very favorable order levels so far in 2017, particularly from CO2 and hydrogen applications.

As mentioned on the previous call, in the quarter, we received a significant award of $8 million to convert asphalt plants to LNG and an $8.7 million order for industrial gas railcars.

Moving to BioMedical. First quarter orders of $51.7 million were up from $48.9 million in the fourth quarter 2016, driven by stronger orders in respiratory, cryobio and commercial. In particular, respiratory orders for concentrators and liquid oxygen products were strong in Europe and Asia, while stainless cryobio orders grew globally.

Revenue grew 5.5% from the prior year quarter, and we expect our full year gross margin for the BioMedical business to grow from the full year 2016 margins, excluding the AirSep insurance settlement.

Turning to our restructuring and investment activities. As mentioned on our fourth quarter 2016 earnings call, we're continuing to reduce our cost structure through 3 significant restructuring projects. First, the BioMed closure and the consolidation of our Buffalo respiratory operations in Canton, Georgia. Second, the consolidation of our China manufacturing facilities. And finally, the relocation of our corporate headquarters from Cleveland, Ohio to Canton, Georgia. I will provide an update on each of the 3 and the anticipated timing of the savings that will result in $10 million of annual run rate savings beginning for the full year of 2018.

The BioMed consolidation was completed on schedule as of March 31, 2017. Resulting from this, we expect approximately $3 million of savings in the remainder of this year. Consolidation of our Chinese facilities has begun and is on track for completion by year-end. The China consolidation reduces cost in both our Energy & Chemical and Distribution & Storage businesses. And the Energy & Chemical Wuxi consolidation is expected to be complete by the end of the second quarter, generating over $1 million of benefit in 2017.

Our corporate headquarters move from Cleveland, Ohio to Canton, Georgia is well under way, with the core functions of finance, IT, tax, treasury and legal being established in Canton. While the functions are well under way in the Canton location, our lease commitment in Cleveland is through the end of the year.

In addition to the restructuring activities, we are progressing on our scheduled 18-month, $24 million capital investment and an additional furnace for capacity and operational improvement for our brazed aluminum heat exchangers in La Crosse, Wisconsin. This investment, along with additional automation and streamlining in our plants, are key aspects of our $35 million to $45 million spend and capital budget, which is fully funded from our $244 million cash on hand.

Additionally, we are actively pursuing our M&A pipeline with a concentration on core technologies and adjacencies.

Before opening up the call to questions, I would like to thank Sam Thomas for his 14 years of leadership of the Chart business. We're excited to continue the organic and inorganic growth efforts that Sam has developed within Chart and look forward to continuing the transition with Sam as our Executive Chairman of the Board effective at our Annual Meeting on May 25.

With that, I will now open it up for questions. Jonathan, please provide instructions to the participants to be able to ask questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Rob Norfleet from Alembic Global Advisors.

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Robert F. Norfleet, Alembic Global Advisors - MD and Senior Analyst [2]

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Just quickly, we've obviously seen nice sequential margin improvement in the E&C business over the last few quarters. Obviously, this quarter going north of 21%. During the last conference call, you had kind of stated that being somewhere in the 20% to 25% range through the year in 2017 would be difficult. So could you kind of discuss what we saw in Q1? Were there some onetime items or closeouts that favorably impacted margins in the E&C? And should we expect to see margins consistently in that low 20% plus range for the year?

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Jillian C. Evanko, Chart Industries, Inc. - CFO and VP of Finance [3]

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Yes, so in the first quarter, we did have a quick shift in the E&C business, which had about a 50% margin level on it. The magnitude of that was about $1.5 million on the revenue side. On a full year basis, we expect to be in the 20% range for E&C business.

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Robert F. Norfleet, Alembic Global Advisors - MD and Senior Analyst [4]

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Okay, great. And then secondly, you all noted an SG&A run rate of around $180 million to $185 million for the year, but as you start to see order trends increasing, and obviously revenues growing, clearly, there's going to be a point where you're going to have to basically reinvest back in the business, whether it's adding to your labor force or capacity. At what point -- I guess, at what level of revenue or what increase in revenues would you expect to see the SG&A have to start ticking higher?

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Jillian C. Evanko, Chart Industries, Inc. - CFO and VP of Finance [5]

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We feel that the SG&A at the $180 million to $185 million level will support $1.2 billion of volume.

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William C. Johnson, Chart Industries, Inc. - President and COO [6]

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We've been very careful to not cut our SG&A expenses on the sales side, on the engineering side of the house and our ability to perform there and deliver on that level of revenue.

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Robert F. Norfleet, Alembic Global Advisors - MD and Senior Analyst [7]

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Okay, great. And the last question and then I'll get back in the queue. Obviously, with 1 quarter done and still 3 quarters ahead of us, but the guidance range is still fairly wide from $0.60 to $1. Can you kind of walk us through what needs to happen to effectively get to the high end of that. Is it going to be more predicated on seeing a faster improvement in order intake in E&C and D&S? Or is it more of a matter of the margin improvement?

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William C. Johnson, Chart Industries, Inc. - President and COO [8]

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I think it's a little bit of everything, right? There is certainly is on the E&C side, the business is a little bit lumpy in terms of orders. And on the quick ship side, we don't -- it's really hard to kind of predict those types of orders coming into the E&C business. So I think that certainly plays a part in getting to the high end of the range. We are off to a good start in the D&S business, and we're seeing good margins there in line with the plan that we had. And the first quarter, we had very nice orders. So we'll keep a close eye on that as you go throughout the year, but I think so far, we're off to a pretty good start. But really, the lumpiness of the E&C business will drive kind of the high end of the range.

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Operator [9]

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Our next question comes from the line of Eric Stine from Craig-Hallum.

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Eric Andrew Stine, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst in the Equity Research department [10]

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Just maybe starting with E&C. You mentioned the Tellurian FEED study under way in your pipeline. I mean, is there any way, it may be tough, but any way you can quantify kind of a year-over-year change to that pipeline? And then maybe when you think about the pipeline, can you talk about the mix between Chart's involvement in engineering versus supplying the equipment because it obviously has a pretty big impact on the scope?

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William C. Johnson, Chart Industries, Inc. - President and COO [11]

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Yes, I mean, I don't think we want to get into the business of handicapping which projects are going to go forward. But we certainly are seeing a lot of projects have a lot of activity, more activity, more inquiries. The Tellurian project did advance with the FEED study and also the FERC filing for that project, which we're hoping to see that come out of FERC in the first quarter of 2018, which -- if all the timing is right. We certainly have -- Cheniere has assigned us a FEED study, and that's with the KBR, Chart and Siemens kind of consortium on that project. So I would say, those are the 2 that are kind of top of mind right now. We do have a midscale proprietary liquefaction technology that will be used in both these projects if they go forward, which is -- will be our first entry into kind of the -- where we have the process technology. So we're excited about that, having a midscale liquefaction solution. And we've generated -- there is -- we have generated a lot of interest with that technology.

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Eric Andrew Stine, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst in the Equity Research department [12]

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Got it. In the case of those 2 midscale projects are using that, I mean, is that where you would be more -- there'd be more engineering and, therefore, more scope?

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William C. Johnson, Chart Industries, Inc. - President and COO [13]

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Yes.

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Eric Andrew Stine, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst in the Equity Research department [14]

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Okay. Maybe just turning to industrial gas. Good to see the packaged gas pick up there. I mean, as you think about that longer term, I know that's a good leading indicator. Is that something that you foresee translating into air separation and picking up on the E&C side?

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William C. Johnson, Chart Industries, Inc. - President and COO [15]

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No, I don't see air separation taking -- picking up in 2017. Where we saw strength in the packaged gas was really on the CO2 and hydrogen applications.

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Eric Andrew Stine, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst in the Equity Research department [16]

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Okay. All right, last one from me. Just to clarify. So I mean you mentioned quick ship in the previous questions about getting to the top end of guidance. But just to clarify, I mean, you had what you did in the first quarter, but you're not assuming any quick ship business in that guidance, is that right?

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Jillian C. Evanko, Chart Industries, Inc. - CFO and VP of Finance [17]

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That is correct.

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Operator [18]

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Our next question comes from the line of Rob Brown from Lake Street Capital.

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Robert Duncan Brown, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [19]

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On your Hetsco business, what was the contribution in the quarter, and how do you see that playing out for the year?

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Jillian C. Evanko, Chart Industries, Inc. - CFO and VP of Finance [20]

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So for the quarter from a financial standpoint, we look at the Hetsco business as part of LifeCycle. The full year look on the Hetsco particular business is in the mid-$20 million range on the top line and contributing to the bottom line at around 10% to 15%. In the first quarter, it's on track to that for the full year.

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Operator [21]

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Our next question comes from the line of Jeff Osborne from Cowen and Company.

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Jeffrey David Osborne, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [22]

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Maybe just to pick up on the LifeCycle question. I heard the Hetsco response, what -- just how is LifeCycle doing, in general, and what do you expect the contribution for that to be for the year?

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William C. Johnson, Chart Industries, Inc. - President and COO [23]

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Yes -- no, I mean, we're very excited about the LifeCycle business. We continue to work on the integration of the Hetsco piece into it. But we're looking at that business being somewhere around the $40 million, $50 million business this year. And that's up quite a bit from last year.

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Jeffrey David Osborne, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [24]

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Exactly. Two others from my end. You mentioned, I think twice in the call, about LNG vehicle tanks and I think refueling you mentioned in Asia. Can you just talk about, I assume that's China, but what you're seeing in that market and the outlook for the rest of the year?

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William C. Johnson, Chart Industries, Inc. - President and COO [25]

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Yes, so we've seen nice vehicle tank in Europe, in particular. And we continue to see strength there, and we continue to see that be a strong market throughout 2017 and into 2018. In Asia, we saw an uptick in our fuel supply stations. I don't want to get too far out ahead in Asia. The utilization on the liquefaction capabilities are there and the fueling stations is still relatively low. But there are areas of China where they need these -- more fueling stations; and they're starting to put those in. And I think a lot of it's being driven by diesel prices have creeped up in the last kind of 18 months or so, 15, 18 months in China by 20%, where gas prices have stayed relatively flat. So it's driving heavy-duty truck, more heavy-duty truck utilization of LNG. So there are areas of highways that need to have these fueling stations. But I think we're still looking at some period of time before the fueling stations and the existing capacity of liquefaction gets used up.

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Jeffrey David Osborne, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [26]

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Great. The last one I had is just is there a way to handicap the rough size of what, if they were to go through from a FERC perspective, Cheniere and Tellurian would be in terms of potential revenue to Chart?

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William C. Johnson, Chart Industries, Inc. - President and COO [27]

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No, I mean, it really depends on the scope of -- the final scope of products that are -- that they give to us and then whether our technology gets accepted or not.

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Jeffrey David Osborne, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [28]

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How would you characterize the level of the competitive environment, in particular with pricing with the increased activity? Or is it just too early to tell?

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William C. Johnson, Chart Industries, Inc. - President and COO [29]

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In which area?

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Jeffrey David Osborne, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [30]

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E&C, sorry.

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William C. Johnson, Chart Industries, Inc. - President and COO [31]

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It's still a very difficult pricing environment across the board in E&C. I mean, it's still tough markets.

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Jeffrey David Osborne, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [32]

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And D&S would be the same?

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William C. Johnson, Chart Industries, Inc. - President and COO [33]

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I would say that D&S is more stable than E&C, but it's still a tough pricing market.

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Operator [34]

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(Operator Instructions) Our next question comes from the line of Matthew Trusz from Gabelli & Company.

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Matthew A. Trusz, G. Research, LLC - Research Analyst [35]

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Could you just talk about how orders progressed through the quarter in E&C and D&S, and what your sense is of customer confidence levels and sustainability?

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William C. Johnson, Chart Industries, Inc. - President and COO [36]

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I didn't -- sorry, I didn't catch the last part of the question.

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Matthew A. Trusz, G. Research, LLC - Research Analyst [37]

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Sorry, just relating to orders and their cadence, what your sense is of your customers' confidence and how sustainable that is going through April and the balance of 2017?

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Jillian C. Evanko, Chart Industries, Inc. - CFO and VP of Finance [38]

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So through the quarter, our order trend increased sequentially in each month of the quarter across each of the 3 businesses.

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Matthew A. Trusz, G. Research, LLC - Research Analyst [39]

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Great. And then if we turn to BioMedical, can you just talk a little bit about how the respiratory business is performing in the U.S.? I know you said good in Asia and Europe. And then in the U.S. just update on commercial changes there to drive growth on that front.

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William C. Johnson, Chart Industries, Inc. - President and COO [40]

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Yes, we're -- first off, the Asian and European markets were very strong for us. I would say the U.S. respiratory business was flat to down slightly on the revenue side. We have a number of new products that will be coming out within the second quarter, mainly portable oxygen -- a new portable oxygen concentrator in the second quarter, which we think will help the U.S. markets in recovering some of our share there.

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Matthew A. Trusz, G. Research, LLC - Research Analyst [41]

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Any update on the ability to go direct-to-consumer in the next year or so?

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William C. Johnson, Chart Industries, Inc. - President and COO [42]

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Yes, I mean, we're certainly working on that. And I wouldn't expect a large improvement in that in 2017, but certainly, by 2018, we should be in good position there.

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Matthew A. Trusz, G. Research, LLC - Research Analyst [43]

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Great. And then one more for me, if I may. Can you just elaborate on the CapEx framework that you have over the next several years? Granted, spending $24 million this year on the furnace, but do you think you'll find another $20 million to $25 million every year of good-return projects above and beyond your maintenance needs? And where do you want to make the investments, what's the priority?

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Jillian C. Evanko, Chart Industries, Inc. - CFO and VP of Finance [44]

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Matt, just as a clarifying point, the $24 million on the investment this year is actually $24 million for that entire project, which will go across '17 and '18. So -- and in this particular year, we've got about $17 million of that $24 million.

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William C. Johnson, Chart Industries, Inc. - President and COO [45]

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So I think, historically, we've been in that kind of $20 million range on productivity. And I can tell you that when we -- within our factory, there certainly is plenty of automation opportunities for us to go after, and we are. And so I would say we can continue at that level for quite a few years.

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Operator [46]

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Our next question comes from the line of Pavel Molchanov from Raymond James.

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Pavel S. Molchanov, Raymond James & Associates, Inc., Research Division - Energy Analyst [47]

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So my understanding is you have 3 midscale liquefaction opportunities with Cheniere, Tellurian and Magnolia. If all 3 hypothetically were to move forward, can you give a sense of what the backlog uplift would be from those 3 contracts?

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William C. Johnson, Chart Industries, Inc. - President and COO [48]

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Yes, it's a pretty big number. That's -- it's -- I guess it's another way of asking the same question that somebody else asked earlier. It really depends on scope of the product being asked for and supplied and whether our technology is involved or not. So it's in the hundreds of millions of dollars for sure.

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Pavel S. Molchanov, Raymond James & Associates, Inc., Research Division - Energy Analyst [49]

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Okay. And as you talk to those 3 prospective customers, what is their main message about what's keeping these projects from moving forward faster. Is it on the regulatory front or is it more on the contracting and offtake agreement front?

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William C. Johnson, Chart Industries, Inc. - President and COO [50]

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No, I think it's more on the offtake and getting that piece of it down so that they can get FID.

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Operator [51]

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And this does conclude the question-and-answer session of today's program. I'd now like to turn the call back over to Sam Thomas for some concluding remarks.

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Samuel F. Thomas, Chart Industries, Inc. - Chairman and CEO [52]

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Thank you, Jonathan. We're pleased with our first quarter results and the order trends, in particular, with the positive trends in our D&S packaged gas business and our E&C order growth. The quarter's growth in orders and revenue across all business units, combined with our progress on our restructuring activities, acquisition integration and capital investments support our outlook for the full year. Thank you to everyone for listening today. Good-bye.

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Operator [53]

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Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.