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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 27, 1998
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Chart Industries, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-11442 34-1712937
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
5885 Landerbrook Drive, Suite 150 Mayfield Heights, Ohio 44124
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (440) 753-1490
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
Chart Industries, Inc. (the "Company") issued a News Release on
April 27, 1998, a copy of which is filed as Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99 News Release dated April 27, 1998, from the Company.
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHART INDUSTRIES, INC.
Date: April 27, 1998 By: /s/ Thomas F. McKee
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Thomas F. McKee
Secretary
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
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<S> <C>
99 News Release dated April 27, 1998.
</TABLE>
E-1
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(LOGO)
FOR IMMEDIATE RELEASE
Contact: Don A. Baines
Chief Financial Officer
Chart Industries, Inc.
(888) 704-7608
CHART INDUSTRIES REPORTS 77% INCREASE IN NET INCOME
FOR 1998'S FIRST QUARTER
Mayfield Heights, OH - April 27, 1998 - Chart Industries, Inc. (NYSE: CTI) today
reported record financial results for its first quarter ended March 31, 1998. A
strong operating performance boosted sales 32 percent and led to a 77 percent
increase in net income over the first quarter of 1997. Earnings per share on a
diluted basis were $0.48.
Sales for the first quarter of 1998 rose 32.2 percent to $56.1 million from
$42.2 million for the corresponding quarter in 1997. Record net income of $7.9
million, or $0.48 per share, for the first quarter of 1998 increased 77.2
percent from $4.5 million, or $0.30 per share, for the 1997 first quarter.
Commenting on Chart's 1998 first-quarter results, Arthur S. Holmes, Chairman
and CEO, said, "We are pleased with the Company's exceptional operating
performance. Our robust backlog and continued gains in productivity enabled us
to match our quarterly sales record, which was set in the fourth quarter of
1997. A very favorable product mix also led us to record margins and profits."
"Our strategies continue to produce solid results. We are well positioned to
experience continued profitable growth as a result of internal initiatives and
positive contributions from Cryenco and our most recent acquisition, Chart
Marston, Ltd."
Financial highlights are as follows (all figures are in thousands of dollars
except per share amounts, which are based on average shares outstanding on a
diluted basis):
<TABLE>
<CAPTION>
Three Months ended March 31,
<S> <C> <C> <C>
1998 1997 % Change
Sales $56,104 $42,440 32.2
Gross profit 20,364 12,168 67.4
Net income 7,942 4,481 77.2
Net income per share assuming dilution 0.48 0.30 60.0
</TABLE>
CONSOLIDATED FIRST QUARTER 1998 FINANCIAL RESULTS
Sales for the three-month period ended March 31, 1998 were $56.1 million versus
$42.4 million for the comparable 1997 period, an increase of $13.7 million, or
32.2 percent. The addition of Cryenco, acquired on July 31, 1997, contributed
$6.8 million in industrial gas equipment sales to the first quarter. Sales to
the hydrocarbon processing equipment market increased $8.9 million in a
year-over-year comparison and accounted for 31.2 percent of total sales
compared with 20.2 percent last year.
Chart Industries, Inc.
5885 Landerbrook Dr. Suite 150 Mayfield Heights, Ohio 44124
(440) 755-1490 Fax 739-1491
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Gross profit for the the three-month period ended March 31, 1998 was $20.4
million versus $12.2 million for the comparable period in 1997, an improvement
of $8.2 million or 67.4 percent. Gross profit margin for the 1998 first quarter
was 36.3 percent compared with 33.7 percent and 28.7 percent in Chart's 1997
fourth and first quarters, respectively. The shift in the sales mix to the
higher margin hydrocarbon processing equipment, combined with better
productivity, led to the increased gross profit margin.
Selling, general and administrative (SG&A) expense for the three-month period
ended March, 31, 1998 was $8.1 million, an increase of $2.8 million over the
first quarter of 1997. SG&A expense in Chart's 1998 first quarter included
$900,000 for the addition of Cryenco, increased commission expenses driven by
higher margin hydrocarbon processing equipment sales and increased
incentive related expenses. As a percentage of sales, SG&A expense increased
to 14.5 percent for the 1998 first quarter from 12.7 percent for the first
quarter of 1997, also as a result of increased commission and incentive related
expenses which are more directly tied to increasing profitability.
Cash provided by operations for the 1998 first quarter was $7.9 million
compared with $3.5 million in 1997's first quarter. The Company's 1998 first
quarter cash flow continued to reflect the current earnings plus depreciation
and amortization.
In March 1998, the Company purchased previously leased land and buildings at
the Cryenco facility for $3.5 million. With the 1997 fourth quarter completion
of the plant expansion for the heat exchanger product lines, capital
expenditure in the first quarter of 1998 declined to $1.3 million from $2.1
million for the same period in 1997.
On March 27, 1998, the Company completed it acquisition of the Industrial Heat
Exchanger (IHE) division of IMI Marston Limited, a wholly-owned subsidiary of
IMI plc. IHE primarily manufactures brazed aluminum heat exchangers for
industrial cryogenic applications. Under the terms of the agreement, the
Company formed a wholly-owned subsidiary in the U.K., Chart Marston Limited,
which acquired the assets of IHE for 21 million pounds (approximately U.S.
$35.3 million). The Company borrowed 11 million pounds (approximately U.S.
$18.5 million) on its $45 million multi-currency credit facility to complete the
acquisition. The allocation of the purchase price included in the March 31,
1998 condensed consolidated balance sheet is preliminary and is based on IHE's
valuations as of that date. Operating results for Chart Marston will be
included in the Company's financial statements commencing April 1, 1998.
The investment of excess cash subsequently used for the Chart Marston
acquisition generated net interest income for the 1998 first quarter of $190,000
versus $8,000 for the prior year's first quarter. As March 31, 1998, the Company
had borrowings of $18.4 million on its $45 million credit facility. The Company
was in compliance with all covenants related to this facility at March 31, 1998.
The Company forecasts sufficient cash flow from operations and available
borrowings to fund principal and interest payments, dividends and capital
expenditures.
Backlog
Chart's consolidated firm order backlog at March 31, 1998 was $144.0 million,
an increase of $16.5 million from $127.5 million at December 31, 1997. Orders
for the 1998 first quarter totaled $46.7 million, compared with $31.7 million
for the 1997 first quarter. Chart Marston added $25.9 million to the backlog at
March 31, 1998.
Industrial gas equipment backlog at March 31, 1998 was $75.9 million, up from
$59.5 million at the close of the 1997 fourth quarter. First quarter orders
increased $8.8 million in a year-over-year comparison to $27.0 million in 1998
from $18.2 million in 1997, primarily due to the $7.1 million addition of
Cryenco. Chart Marston added $16.6 million in industrial gas equipment backlog
at
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March 31, 1998. While this segment of Chart's business has experienced some
softening in inquiries and consumer forecasts, order levels remain high.
Hydrocarbon processing equipment backlog stood at $53.0 million at March 31,
1998, compared with $49.9 million at December 31, 1997. Orders for the 1998
first quarter increased $8.4 million to $11.5 million from $3.1 million for the
same quarter last year on the strength of orders for brazed aluminum heat
exchangers. This market remains very strong. The ethylene, LNG and natural gas
processing segments, in particular, have a number of projects in quotation.
Special products backlog totaled $15.2 million at March 31, 1998, down from
$18.1 million at the 1997 year-end. The LIGO project, which will be completed in
1998, accounted for $6.3 million of backlog at the end of the 1998 first
quarter. Orders declined $2.1 million in a year-over-year comparison to $8.3
million for the 1998 first quarter from $10.4 million for last year's first
quarter. The market for vacuum equipment remains active, with both domestic and
international demand for satellite testing chambers running particularly strong.
This release contains forward-looking statements 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 industrial
purpose equipment primarily for low-temperature and cryogenic applications. The
Company also manufactures other industrial equipment such as structural pipe
supports, stainless steel tubing and high-vacuum systems. Headquartered in
Mayfield Heights, Ohio, Chart has domestic operations located in Arkansas,
California, Colorado, Louisiana, Massachusetts, New Hampshire, Ohio,
Pennsylvania and Wisconsin, and a European operation located in Wolverhampton,
England.
For more information on Chart Industries, Inc., via the internet, visit our home
page at Chart-Industries.com or the Corporate News on the Net page at
http://www.businesswire.com/cnn/ctl.htm or via fax through our News on Demand
Service at (800) 311-7462.
Due to the recent change in the corporate headquarters area code from 216 to
440, many callers have experienced problems in reaching the Company by phone
and fax. The problem is a result of the caller's phone service not recognizing
the new area code and exchange. If you are still experiencing problems, please
have your phone service provider check whether your system recognizes the new
area code and exchange.
(See attached financial tables)
CHART INDUSTRIES, INC., AND SUBSIDIARIES
MARKET INFORMATION
FOR 1998'S FIRST QUARTER
<TABLE>
<CAPTION>
Three Months ended March 31, 1998
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Percent Gross Percent Gross
Sales of Profit of Profit
($000) Total ($000) Total Margin
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Industrial Gas.......... $27,236 48.5% $9,006 44.2% 33.1%
Hydrocarbon Processing.. 17,626 31.3% 7,490 36.8% 42.7%
Special Products........ 11,342 20.2% 3,868 19.0% 34.1%
------ ----- ----- ----- -----
</TABLE>
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CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS March 31, December 31,
1998 1997
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Current Assets
Cash and cash equivalents $ 5,926 $ 22,095
Accounts receivable 41,498 31,636
Inventories 28,514 25,617
Other current assets 5,555 5,501
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Total Current Assets 81,493 84,849
Property, plant & equipment, net 40,074 27,241
Goodwill, net 40,050 15,698
Other intangible assets, net 1,142 1,131
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TOTAL ASSETS $162,759 $128,919
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LIABILITIES & SHAREHOLDERS EQUITY
Current Liabilities
Accounts payable $ 11,185 $ 8,911
Customer advances 16,872 13,710
Billings in excess of contract
revenue 1,741 3,030
Accrued expenses and other
liabilities 26,628 21,514
Current portion of long-term
debt 562 558
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Total Current Liabilities 56,988 47,723
Long-term debt 22,487 4,195
Deferred income taxes 544 544
Shareholders' Equity 82,740 76,457
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $162,759 $128,919
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</TABLE>
The balance sheet at December 31, 1997 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.
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CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
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<S> <C> <C>
Sales............................................................. $56,104 $42,440
Cost of products sold............................................. 35,740 30,272
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Gross profit...................................................... 20,364 12,168
Selling, general & administrative expenses........................ 8,145 5,386
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Operating income.................................................. 12,219 6,782
Interest income - net............................................. 190 8
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Income before income taxes........................................ 12,409 6,790
Income taxes...................................................... 4,467 2,309
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Net income........................................................ $7,942 $4,481
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Net income per common share....................................... $0.49 $0.31
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Net income per common share - assuming dilution................... $0.48 $0.30
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Shares used in per share calculations.............................. 16,148 14,654
Shares used in per share calculations - assuming dilution.......... 16,416 14,967
</TABLE>
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CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands)
THREE MONTHS ENDED
MARCH 31,
---------------------
1998 1997
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OPERATING ACTIVITIES
Net Income $ 7,942 $ 4,481
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,297 679
Contribution of stock to
employee benefit plans 577 188
Increase (decrease) in cash resulting from
changes in operating assets and
liabilities net of effects
of businesses acquired:
Accounts receivable (228) (417)
Inventory and other current assets (191) 1,475
Accounts payable and accrued liabilities 701 (221)
Billings in excess of contract revenues
and customer advances (2,183) (2,695)
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Net Cash Provided By Operating Activities 7,915 3,490
INVESTING ACTIVITIES
Capital expenditures (1,332) (2,120)
Acquisition of Marston (35,324)
Acquisition of Cryenco land and building (3,500)
Other investing activities 12 39
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Net Cash Used in Investing Activities (40,144) (2,081)
FINANCING ACTIVITIES
Borrowings on credit facility 18,471 2,750
Repayments on credit facility (1,500)
Repayments on long-term debt (101) (97)
Treasury stock and stock option
transactions (1,098) (5,490)
Dividends paid to shareholders (1,212) (891)
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Net Cash Provided by (Used in)
Financing Activities 16,060 (5,228)
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Net decrease in cash and cash equivalents (16,169) (3,819)
Cash and cash equivalents at beginning
of period 22,095 9,408
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,926 $ 5,589
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