Chart Industries Reports First Quarter Earnings Per Share of $0.12; One-Time Charges Planned for the Second and Third Quarters.CLEVELAND--(BUSINESS WIRE)--May 3, 1999-- Chart Industries, Inc. (NYSE NYSE See: New York Stock Exchange :CTI (Computer Telephone Integration) Combining data with voice systems in order to enhance telephone services. For example, automatic number identification (ANI) allows a caller's records to be retrieved from the database while the call is routed to the appropriate party. ), today reported financial results for its first quarter ended March 31, 1999. Sales decreased 20 percent and net income decreased 62 percent from the first quarter of 1998. Earnings per share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis were $0.12. Sales for the first quarter of 1999 decreased 20.5 percent to $44.6 million from $56.1 million for the corresponding quarter in 1998. Net income was $2.9 million, or $0.12 per diluted share, for the first quarter of 1999 compared with $7.9 million, or $0.32 per diluted share, for the first quarter of 1998, a decrease of 62.5 percent. Commenting on Chart's 1999 first-quarter financial results, Arthur S. Holmes, Chairman and Chief Executive Officer, said, "Our performance this quarter continued to reflect the adverse effects of the worldwide slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. for new plant construction in the industrial gas market. As previously reported, business conditions were very competitive, particularly in our Process Systems & Equipment (PS&E) segment, and have resulted in lower prices and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . With backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. and current order intake down for heat exchangers heat exchanger Any of several devices that transfer heat from a hot to a cold fluid. In many engineering applications, one fluid needs to be heated and another cooled, a requirement economically accomplished by a heat exchanger. and coldboxes, we have taken steps to reduce throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. for the first six to nine months of this year. Based upon past cycles in the industrial gas new construction market and current customer input, we expect to see some improvement in order intake for our PS&E segment in the second half of 1999. In the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified" meantime, meanwhile , we are aggressively pursuing and winning the majority of orders being placed by our customers." "The Distribution, Storage & Applications (DS&A) segment remained stable during this past quarter. Although our sales from this segment were down quarter over quarter, orders increased and backlog strengthened. These stabilizing stabilizing, v to hold a limb motionless in order to ground its energy; a standard isometric resistance technique, it releases tension and lengthens muscle fibers. characteristics bode bode 1 v. bod·ed, bod·ing, bodes v.tr. 1. To be an omen of: heavy seas that boded trouble for small craft. 2. well for Chart going forward, since our recent acquisitions of MVE MVE Murray Valley Encephalitis MVE Market Value of Equity MVE Midwest Vocal Express (barbershop chorus) MVE Mid Valley Engineering (Modesto, CA) MVE Modulo Variable Expansion and Northcoast Cryogenics cryogenics: see low-temperature physics. cryogenics Study and use of low-temperature phenomena. The cryogenic temperature range is from −238°F (−150°C) to absolute zero. At low temperatures, matter has unusual properties. will add significantly to the sales of this segment and Chart's opportunity for growth. Several of the newly acquired product lines have significant potential for growth, particularly in Europe." -0-
Three months ended March 31
1999 1998 % Change
---- ---- --------
Sales $44,588 $56,104 (20.5)
Gross profit 12,317 20,560 (40.1)
Net income 2,902 7,942 (63.5)
Net income per share - assuming
dilution 0.12 0.32 (62.5)
RECENT EVENTS On April 12, 1999, the Company completed its acquisition of MVE Holdings, Inc. Under the terms of the merger agreement, a wholly owned Chart subsidiary paid approximately $240 million in cash to purchase all of MVE's common and preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , to pay off existing debt instruments, and to complete the tender offer and consent solicitation Consent Solicitation A solicitation by one party to the stakeholders of a particular security for the consent of a material change. Notes: Should the majority of stakeholders provide valid consent prior to the consent expiry date, the issuer may then follow through with for the outstanding 12-1/2 percent senior secured notes due 2002 issued by MVE, Inc. To finance the acquisition, the Company negotiated a $300 million senior secured credit facility (the "Senior Credit Facility") with Chase Manhattan Bank The Chase Manhattan Bank, now part of JPMorgan Chase, was formed by the merger of the Chase National Bank and the Bank of the Manhattan Company in 1955. The bank is headquartered in New York City. . The Senior Credit Facility bears interest at a rate based on LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). and contains certain restrictive covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. . The Company forecasts sufficient cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and available borrowings to fund the increased principal and interest payments as a result of the acquisition, as well as dividends and capital expenditures. In conjunction with its purchase of MVE, Chart also announced today that it expects to record, in the second quarter of 1999, a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $22 million for the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of acquired in-process research and development and a charge of $6 million, net of taxes, as an extraordinary item for the early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of the MVE 12-1/2 percent senior secured notes due 2002. As previously announced, the acquisition of MVE provides considerable opportunities for consolidation and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of Chart's industrial tank business. Senior managers from MVE, Chart's Process Engineering (PEI) and CVI CVI C (Language) Virtual Instrument CVI Clinical and Vaccine Immunology (journal) CVI Chronic Venous Insufficiency CVI Coastal Vulnerability Index CVI Canaan Valley Institute divisions, and Chart's wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. Cryenco are working to finalize fi·nal·ize tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... consolidation and restructuring plans in order to meet the desired synergies of the acquisition. Chart expects these restructuring and consolidation decisions to be completed within the next 60 days. Final determination of these additional cash and non-cash restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. will be announced and taken in the second and third quarters of 1999. Mr. Holmes stated, "I am confident that these changes to Chart's operating and financial structures will allow for our profitability growth going forward. They will not only enhance profitability during soft market conditions, but will also provide greater earnings during strong market conditions. We are now positioned to be the market leader for virtually every product line we offer. Our comprehensive product portfolio is unmatched and we now offer our customers international one-stop shopping for virtually all of their cryogenic cryogenic /cry·o·gen·ic/ (-jen´ik) producing low temperatures. cry·o·gen·ic adj. 1. Relating to or producing low temperatures. 2. equipment needs." CONSOLIDATED FIRST-QUARTER 1999 FINANCIAL RESULTS Sales for the first quarter of 1999 were $44.6 million versus $56.1 million for the first quarter of 1998, a decrease of $11.5 million, or 20.5 percent. Sales from the PS&E segment, which accounted for 56.9 percent of total sales in the first quarter of 1999, decreased $2.9 million from the first quarter of 1998. Sales from the DS&A segment and the Special Products segment decreased $4.5 million and $4.1 million, respectively, compared with the year-ago quarter. Gross profit for the first quarter of 1999 was $12.3 million versus $20.6 million for the first quarter of 1998, a decline of $8.2 million, or 40.1 percent. Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. for the first quarter of 1999 was 27.6 percent versus 36.6 percent for the first quarter of 1998. The decline in gross profit margin occurred primarily in the PS&E segment, where the margin decrease was greater than 14 percentage points, reflecting low margin orders received in 1998. The Asian economic situation, softness in the industrial gas market, and a strong U.S. dollar compared to the Japanese yen “Yen” redirects here. For the other use, see Yen (disambiguation). “JPY” redirects here. For the Australian singer with the same moniker, see John Paul Young. adversely affected pricing and order volume. Selling, general and administrative (SG&A) expense for the first quarter of 1999 was $7.6 million, a decrease of $750,000 from the first quarter of 1998. The first quarter of 1999 includes $1.5 million of SG&A expense for Chart Marston, which was not included in the Company's results of operations for the first quarter of 1998. The decrease from the first quarter of 1998 is primarily a result of the sales decline. SG&A expense as a percentage of sales increased to 17.0 percent for the first quarter of 1999 from 14.9 percent for the first quarter of 1998. Cash provided by operations for the first quarter of 1999 was $3.1 million compared with $7.9 million in the first quarter of 1998. The Company's 1999 first-quarter operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. primarily represents current earnings plus depreciation and amortization, and is down due to the $5.0 million decrease in net income from the first quarter of 1998. Capital expenditures for the first quarter of 1999 were $1.8 million compared with $4.8 million in the first quarter of 1998, which included $3.5 million for the purchase of previously leased land and buildings at the Cryenco facility. On March 15, 1999, the Company completed its acquisition of a group of privately held companies privately held company A firm whose shares are held within a relatively small circle of owners and are not traded publicly. , collectively known as Northcoast Cryogenics, for $3.0 million in cash and $720,000 in Chart Common Stock. The allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of the purchase price included in the March 31, 1999, condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. is preliminary and is based on Northcoast Cryogenics' valuations as of that date. Net interest expense for the first quarter of 1999 was $330,000 versus net interest income of $190,000 for the first quarter of 1998. As of March 31, 1999, the Company had borrowings of $12.0 million on its $45 million credit facility. This credit facility was retired in April 1999 when the Company entered into the Senior Credit Facility. Backlog Chart's consolidated firm order backlog at March 31, 1999 was $87.7 million, a decrease of $8.5 million from $96.1 million at December 31, 1998. MVE added approximately $22 million to Chart's backlog effective April 12, 1999. Orders for the first quarter of 1999 totaled $34.9 million, compared with orders of $47.3 million for the fourth quarter of 1998. PS&E backlog at March 31, 1999, was $50.6 million, down from $63.7 million at December 31, 1998. Orders for the first quarter of 1999 totaled $12.3 million, compared with $24.6 million in the fourth quarter of 1998. Chart continues to win the majority of new orders placed in this worldwide market. However, overall order activity remains sluggish compared to historical levels. DS&A backlog at March 31, 1999, was $30.8 million, compared with $25.2 million at December 31, 1998. Northcoast Cryogenics added $1.2 million to the DS&A backlog at March 31, 1999. Orders for the first quarter of 1999 totaled $16.7 million, compared with $15.7 million for the fourth quarter of 1998. The largely domestic market for DS&A equipment continues to remain strong. The acquisition of MVE will enhance the Company's presence in this area and lessen less·en v. less·ened, less·en·ing, less·ens v.tr. 1. To make less; reduce. 2. Archaic To make little of; belittle. v.intr. To become less; decrease. its exposure to the more cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. PS&E business. Special Products backlog at March 31, 1999, was $6.2 million, down from $7.3 million at December 31, 1998. Orders for the first quarter of 1999 totaled $5.9 million, compared with $6.9 million for the fourth quarter of 1998. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Such risks and uncertainties include, but are not limited to, unanticipated slowdowns in the Company's major markets, the impact of competition, the effectiveness of operational changes expected to increase efficiency and productivity, and worldwide economic and political conditions and foreign currency fluctuations that may affect worldwide results of operations. Chart Industries, Inc., manufactures standard and custom-built systems and equipment primarily in low-temperature and cryogenic applications. Headquartered in Cleveland, Ohio "Cleveland" redirects here. For the Cleveland metropolitan area, see . For other uses, see Cleveland (disambiguation). Cleveland is a city in the U.S. state of Ohio and the county seat of Cuyahoga County, the most populous county in the state. , Chart has domestic operations located in 16 states and international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. located in Australia, China, Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. , England, Germany and Singapore. For more information on Chart Industries, Inc., via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , visit our home page at http://chart-ind.com or the Corporate News on the Net page at http://www.businesswire.com/cnn/cti.htm or via fax through our News on Demand Service at 800/311-7462. -0-
CHART INDUSTRIES, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
FOR THE FIRST QUARTER OF 1999
Three months ended March 31, 1999
Sales Gross Profit
Gross
Percent Percent Profit
($000) of Total ($000) of Total Margin
---------------- ---------------- ------
Process Systems
& Equipment $25,364 56.9% $6,749 54.8% 26.6%
Distribution, Storage &
Applications 12,240 27.5% 3,159 25.6% 25.8%
Special Products 6,984 15.6% 2,409 19.6% 34.5%
------- ----- ----- -----
$44,588 100.0% $12,317 100.0% 27.6%
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
March 31, December 31,
ASSETS 1999 1998
-------------------------
Current Assets
Cash and cash equivalents $2,493 $2,169
Accounts receivable, net 39,223 37,336
Inventories, net 32,912 29,803
Other current assets 7,596 6,803
-------------------------
Total Current Assets 82,224 76,111
Property, plant and equipment, net 40,966 40,536
Goodwill, net 34,054 31,568
Other intangible assets, net 10,032 9,990
-------------------------
TOTAL ASSETS $167,276 $158,205
-------------------------
-------------------------
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $12,632 $11,540
Customer advances 16,569 13,011
Billings in excess of contract revenue 1,715 2,194
Accrued expenses and other liabilities 24,200 25,783
Current portion of long-term debt 474 431
-------------------------
Total Current Liabilities 55,590 52,959
Long-term debt 15,497 10,894
Deferred income taxes 1,153 1,198
Shareholders' Equity 95,036 93,154
-------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $167,276 $158,205
-------------------------
-------------------------
The balance sheet at December 31, 1998 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted
accounting principles for complete financial statements.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars
in thousands, except per share amounts)
Three Months Ended
March 31,
1999 1998
-------------------------
Sales $44,588 $56,104
Cost of products sold 32,271 35,544
-------------------------
Gross profit 12,317 20,560
Selling, general & administrative
expenses 7,592 8,341
-------------------------
Operating income 4,725 12,219
Interest income(expense) - net (328) 190
-------------------------
Income before income taxes 4,397 12,409
Income taxes 1,495 4,467
-------------------------
Net income $2,902 $7,942
-------------------------
-------------------------
Net income per common share $0.12 $0.33
-------------------------
-------------------------
Net income per common share -
assuming dilution $0.12 $0.32
-------------------------
-------------------------
Shares used in per share calculations 23,644 24,222
Shares used in per share
calculations - assuming dilution 23,841 24,624
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
Three Months Ended
March 31,
-------------------------
1999 1998
-------------------------
OPERATING ACTIVITIES
Net income $2,902 $7,942
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,779 1,297
Deferred income taxes (203)
Contribution of stock to employee benefit plans 367 577
Increase (decrease) in cash resulting from changes
in operating assets and liabilities:
Accounts receivable (1,095) (228)
Inventory and other current assets (3,046) (191)
Accounts payable and other current liabilities (889) 701
Billings in excess of contract revenue and
customer advances 3,243 (2,183)
-------------------------
Net Cash Provided By Operating Activities 3,058 7,915
INVESTING ACTIVITIES
Capital expenditures (1,775) (4,832)
Acquisition of Northcoast Cryogenics,
net of cash acquired (2,995)
Acquisition of Chart Marston (35,324)
Other investing activities (308) 12
-------------------------
Net Cash Used In Investing Activities (5,078) (40,144)
FINANCING ACTIVITIES
Principal payments on long-term debt (1,270) (101)
Borrowings on credit facility 23,250 18,471
Repayments on credit facility (18,500)
Treasury stock and stock option transactions (354) (1,098)
Dividends paid to shareholders (1,183) (1,212)
-------------------------
Net Cash Provided by Financing Activities 1,943 16,060
-------------------------
Net decrease in cash and cash equivalents (77) (16,169)
Effect of exchange rate changes on cash 401
Cash and cash equivalents at beginning of period 2,169 22,095
-------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,493 $5,926
-------------------------
-------------------------
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