Chart Industries Inc has reported net income for the second quarter of this year as US$ 20.1 million. This compares with a net income of US$ 20.0 million for the same time last year. Net sales for Q2 this year increased 3% to US$ 306.8 million from US$ 298.3 million in the comparable period in 2013. Gross profit for the second quarter of 2014 was US$ 92.2 million.
Backlog on June 30 of this year was US$ 695 million down 5$% from March 31. Orders for the second quarter were US$ 280.6 million compared with US$ 262.6 million in the first quarter. Net interest expense was US$ 4.1 million for the second quarter of 2014, which included US$ 2.6 million of non-cash accretion expense and associated with the company’s notes. Net cash interest was US$ 1.5 million.
Energy and Chemicals (E&C) segment sales increased 18% to US$ 93 million for Q2 2014 compared with US$ 78.7 million for Q2 2013. Additional project volume in the process systems business led the improvement. E&C gross profit margins were 26.5% in the 2014 quarter with 29% in the same quarter of 2013. Margins were unfavourably impacted in the quarter by project mix weighted towards large scale, lower margin LNG projects, a higher percentage of lower margin industrial gas business and startup costs related to the La Crosse expansion and Wuxi acquisition.
Distribution and Storage (D&S) segment sales improved 1% to US$ 149.1 million in Q2. Sales in North America and Europe offset the sales decline in China as a result of customer delays. D&S gross profit margin improved to 30.6% in the quarter compared with 28.4% a year ago on improved volume and product mix in the US and Europe, including favourable impact from resolution of a partial contract cancellation previously reported. The costs D&S incurred during Q1 associated with this contract were recouped in the second quarter, normalising year to date gross profit margin.
Based on Q2 results, current order backlog, and business expectations for the remainder of the year, the company is adjusting its previously announced sales and earnings guidance. Due primarily to customer delays in D&S China, annual sales and earnings are no longer expected to reach the company’s previous estimates. Overall, the company remains positive on the long term outlook for the use of natural gas as a transportation fuel.
Sam Thomas, Chairman, President and CEO, Chart said, ‘we are excited by the trend we are seeing in small to mid scale liquefaction in North America with two standard plant awards using Chart’s proprietary liquefaction technology announced in the last 60 days. This includes the new award announced today [31 July 2014] with Fortis, which will be reflected in third quarter orders, and the award announced with LNG Holdings in June which is included in second quarter orders. The Golar Floating Liquefied Natural Gas (FLNG) project award from Black & Veatch announced today will be reflected in third quarter orders and showcases the unique advantages that brazed aluminium heat exchangers offer for LNG applications.
Thomas continued, ‘order activity in China continues to grown, but delays in expected customer shipments impacted quarterly results. Sequentially, consolidated LNG related orders grew 19%. We are also beginning to see positive signs in the BioMedical respiratory market as revenues grew 35% sequentially.’
Adapted by Claira Lloyd
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