Chart Industries (GTLS) 3 May 242024 Q1 Earnings call transcript

Good morning, and welcome to the Chart Industries, Inc. 2024 First Quarter Results Conference Call. [Operator Instructions] The company's release and supplemental presentation were 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 approximately 2 hours following the conclusion of the call until Friday, May 31, 2024. contained company's is release. information replay in press the The

fact, any to company that SEC. publicly no that revise Before and Please the in the forward-looking the the included earnings information like to are forward-looking remind to the obligation statement. or refer historical, risk call we begin, with statements this undertakes release would update and you The regarding forward-looking filings statements. company during statements not in factors are company's made latest

would like to turn Please I Jill conference Evanko, you. ahead. the Thank Ms. now over Chart to Industry's go CEO.

you, Joe morning, Brinkman, Good everyone, walk Yna and joining CFO; for to me you quarter Thank our first [ through and ]. our thank results. XXXX

all of are continuing and metrics for Chart of referenced, the business unless forma operations otherwise Howden, noted. pro all For combined periods

the Slide presentation. on Starting supplemental of X

We'll different expected quarter in few our reported year The across resulting no but margin. To comparative sales setting EBITDA different. slide, adjusted reported typically operating and sales, adjusted first quarter the and orders, associated reported discuss records financial and reported X%, next typical EBITDA XX% is up metrics items. first the is a XXX EBITDA backlog, this that lowest adjusted margin, quarter points. up up margins, summarize, year, gross stronger basis and up and were for to board than reported be on orders and XXXX the organic standout XX%, margin gross was is of the is QX our quarter What of first

continues, facility QX not sales sales in excluding the have stage $XXX.X had or were the our full of quarter sets earlier, growth XXX XXXX since CapEx This all in our XX.X% our that XX%. margin And And of also above sequential Howden, or pipeline, a cryogenic of billion. Demand above in demand quarter. of above history, prior. end approximately or at margin $X.XX at market billion have gross adjusted be Strong we synergy been XX% our as adjusted of sequential gross acquisition, margin, above stepped to This resulting reported drove EBITDA the Theodore to an mentioned 'XX. progress. Reported yet and at quarter adjusted compared quarter of margin our second gross hold, Chart-specific It closed sales margin is actions margin. is backlog points tank in our has margin. ever was the is Alabama XX.X% quarter margin XX.X% in of quarter on quarters, our highest XX.X%. Similar EBITDA highest which facility billion, a in basis as jumbo rare QX. the from record foreign XX.X%. also where or also the this XX% sequential at up First up $XX Howden I operating P&L for of is benefits Teddy grew XX.X% we gross commercial reflected acquisition taking seeing increasing second over exchange with still Tulsa as each was has to second headwind XXXX for and well a adjusted Also, $XX QX since and X, million been from EBITDA our ever as increase, quarter

in name projects traction, few so on for treatment water to open space and commercial in synergy international opportunities, identified marine, have production commercial we're Teddy seeing our turn, increase there's more to funnel this a increased an contributors LNG at broader pipeline. We X and and content rail,

to which QX and Service increased compared orders included XXXX billion quarter Leasing XX.X% of $X.XX orders, First Repair, 'XX. record segment

already first quarter stronger start through We're European seeing industrial our in gas We end that market. strong demand also saw typical April. than

for is which our is expected us changes column, All I'd through of book-to-bill, a QX also is this reiterating the typical year. to of X the strength you contributor to outlook a be terms in versus versus far above pro the year first QX in point X continue resulted to The year-over-year forma which full in shows to each the 'XX XXXX. Slide right-hand first metric. quarter 'XX. quarter X.XX

$X.XX ETR On the diluted more compared anticipated reported year a XXX commented than prior adjusted rate first slide, operating margin grew adjusted shown QX. about And point to is XX%. higher the expect we XX. is than XXXX Both and adjusted continue bps EPS XX% of This tax as the year basis and of increase quarter last EBITDA I a in margin. as reflects XXX approximately XX rows full for in full to

included flow X. million and included cash specific million, which $XX with was Slide X related shown free facility. of free line of $XX cash expectations to our was negative quarter our flow CapEx, are $XXX This million outflows internal in that on Teddy cash that Finally, first

first on earnings were outflows to payments. always has cash the CapEx shared once and XXXX there cash we occur and the fourth fees quarter divestiture Teddy that year, the quarter facility 'XX specific manufacturing a our call, As outflows related other specific X

to cash As A were capital and through in second CapEx. X, course outflows Approximately outside of these in on Slide G rows XXXX. million quarter see the there expected on not $XXX the million can specific repeat first of normal of are of you table $XXX quarter working

to slide, changes our maturity terms optimize completed can On the and and we very left-hand see other recently our strong sheet we you XXXX, bank we bottom credit our favorable facility to This continue and conditions. to opportunistically amendment balance that with side support. an revolving RCF received to of date the extends

financial X.X. our our the are of target of shown until policy leverage reiterate X bottom to slide right on we within range continue as the We ratio net to

specific the there will that in quarter. outflows As million repeat I commented, about X cash across were of not $XXX second items

clear free third flow second. quarter end million. need on be X, we outlook are quarterly align on outlook, therefore, $XXX free Turning providing the the we'll for for and and explicit Slide see to at is do the information, It's to the we can QX based in next quarter's cash to flow the same approximately of you our cash outlooks

Our QX across by shown payments additional outflows in slide, outlook QX the left-hand capital. improvement QX items of those anticipate and obviously, on of the $XXX in beyond well cash including cash lower sequential We projects nonrepeating driven of the project working collections, the globally. by as million side is the receipt top approximately our as

increase final $X facility the to quarter cash sequential We Germany, backlog brazed these will interest of also existing trailer XXXX. To line QX in GOFA and have date, we of throughput XXXX cash did $X no expect flow semiannual We half the for all to quarter which second expansion have for and million finally, our strong. CapEx related Teddy X. facility through that have locations CapEx second our capacity on second payment. generation Tulsa and in million there of has And started lower

with Solutions, X. to CTS. Turning A Slide results. few Cryo points segment Tank the or Starting on

in orders renewals in in quarter from industrial in quarter of of our decreased of 'XX, the driven certain XXXX demand as as and the million 'XX. global compared fourth outlook, $XXX gas as continuing pickup first quarter order The long-term March April about CTS large in XXXX. is well to when X% by the today completed large orders increase first in what booked important agreement we railcar see having of is sequentially First CTS customer a quarter of

highest first orders CTS the history. the within industrial Additionally, general quarter were in our

strong is Reported lows first First very lags. last mid-single material margin coming to $XXX compared of year-over-year million in grows growth, typically normal to profit CTS digits. XXXX sales price/cost from gross off the quarter CTS year. XX.X% quarter in of back increased XXXX, its the This is that when given XX.X% range of low

Next Transfer HTS. Systems or Heat

$XXX bookings quarter about to LNG. of XXXX. 'XX when was to big HTS the XX%, about specific first that the in expect international from of large quarter March an 'XX, XX% driven including IPSMR the early and IOC not million $X.X in of we does book First first billion XX, LNG award include compared HTS project Big orders primarily by quarter decreased backlog

increase 'XX about XX% HTS gross and sales sales of 'XX of quarter XXX a quarter had $XXX to first associated basis for HTS. reported increased compared First margin point million XX.X%, the

is gem margins of in a segment when RSL, look at you a which particular. to Moving

quarter RSL on another of first 'XX we Specialty very and in closed in was sales to particular, quarter were Products XX% as fourth on the bookings. the fourth sequential marine a each which demand, consistently environmentally had XX% RSL growth a when 'XX $XXX when million. million about increased to worth And strong compared increased to RSL increased noting seeing in for of Howden. was primarily 'XX, and X% had RSL we $XXX of record of a gross marine sales driven upgrades were acquisition. We're about by $XXX decreased quarter quarter Howden at profit since first orders been lot orders closed in XX% decline first associated First quarter quarter gross Reported that friendly have of equipment. to margin record above APAC, segment. million, Orders refineries since the 'XX. The orders we the It's Products projects has finally, XX.X% compared also and quarter and in compared RSL decrease 'XX Specialty margin XX.X% we for In of the XX.X% each above 'XX. of a quarter

and marine to now increase transport in CCUS larger-sized We'll in us, our highest maritime Returning and in utilization bookings we driven for In Labs. we Earthly activity to sustainable have few a heavy-duty and had order QX, throughout slides. or increasing Specialty. quarter expect marine come Teddy as carbon particular, our We in storage back the capacity. projects for X XXXX capture history to applications ever in by

quarter driven start the and timing revenue million quarter. volume project project associated to sales in to compared mix to as opportunities the project and just lower preproduction. with XX%, X projects 'XX, we the aftermarket Teddy 'XX year ahead as in specific as Reported well We bring quarter first do this about last was in margin of of are and year, increased of over first-of-a-kind expect first-of-kind the build. of and was increased the $XXX due of sequentially gross for compared multiple specialty fourth there than rest X.X% XX% First by new the

and pro when the that Big LTM in are this XXXX XX, from lines no of to business. gross book our also or Slide We've potential forma orders to LTM considering all our LTM customer XX the on is XXXX, billion just point the XXXX. aftermarket the our trends. million of showing resilience diversity we've from last from this significant historical out demand in feel remains XX.X% $XXX another margin end months our $X.X sales that even is slide positive. takeaway taken key due an way to was XX.X% we This as grown order quarterly on A and beginning million of I'd in that our variances that the shows robust. markets LNG $X.X basis is there in On trend and profit despite we're timing, drop-off

Our key XX. backlog both Slide X and of ones commercial on which pipeline the from shown of tailwinds, macro are are benefiting main

only everything First, not but fact we the is in uses is energy X and starting that the energy stability row in world security, global of access. This energy access do.

to continue part a natural to of LNG be expect and this. We gas

proof, this. orders. though, our variety with gas-associated Our us backlog in telling a customers The global of are is

some happening LNG a minute spend on Let's in things the market.

multiple project moving a LNG fleets LNG ahead infrastructure with globally. the Cedar players being content, built buying of ship and their Chart have lot own You

to gas orders, Beyond including seeing and public recently liquid use, types have private our storage in order receiving end ranging duplicate from we're and date. multiple LNG, of to and of liquefaction hydrogen this Europe across to storage to continues largest hydrogen natural a support

year, the our strong rest quarter in hydrogen pipeline. the We also the have second and visibility particular, of to in

Moving X. row to

water speaking recent we and note and driver clean. clean getting opportunity. and scarcity hazardous hydrogen attention, discuss our a countries, nexus it's that the in a of clean of in to government EPA clean intertwined. certain are we'll It's Chart is macro water with more green stay platform all of slides, political to example. In is officials in and when power, clean as case and particular our more As couple PFAS commercial major with water designation clean an important U.S. This the food industrial Clean for clean touches of water, as associated the power also substances. offering water clean the

solutions which to third data the offerings of row storage, applications and centers, energy. demand compression, driven to moving cooling. CCUS, X, need air fit It in there's fans, few. and name intelligence well, discussed a specialty as So in coolers, is by All just artificial part our energy for item backup electrification, being very inclusive growing these

We these and heat rejection, in have specific for and center baseload data peak shaving near-term power applications commercial opportunities for storage. generation energy

week, Advanced Computing demonstration partners the facility we HX@Scale a please in the Texas to of Texas, that TACC, HX@Scale. that has initiative this Just are and one announced launched in recall to DOE's provide Center, U.S. hydrogen the power or

airplanes slide spend on of existing is a the $X decarbonization, and administration's including announcement by build study the and XX heavy-duty and Biden's Teddy sector in heavy to awarded and is new This larger applications. The DOE serve one applications. facility March in low-emission applications, combined to private infrastructure for progressing on row positioned GHG again, hydrogen. with reason the fourth well trains, to very with we're address as is The the trucks, focus especially is these particular, private billion sector both need demo to ships in transport collaborations supported, well public develop in and via with tank our X projects of industrial liquid reduce emissions

other The onboard globally, achieving to hydrogen and Energy applications including liquid and its turning with Observer in we'll port technology, infrastructures promoting the our Teddy and total to use the solution aim of example production offering space ecosystem, exploration, larger to is So X, hydrogen and transport hydrogen. One X The combined Energy the is a hub reducing of energy integrated XX. hydrogen installation onshore partner cost under maritime liquid maritime low-carbon transport. with Slide hydrogen serve a associated our and to we're for on aerospace, these With both such much cargo partnership the with additional specific to Observer associated heavy-duty establishment liquid able low-carbon overall build an and and our is ship equipment infrastructure Energy Observer, new objectives of facility rail development. essential partners. marine and

example the with the of infrastructure. cryogenics vessel GasLog and liquefaction global liquid our hydrogen commercial-scale recently executed and development large-scale experience our study development liquid solutions latest extensive Another is and services distribution supply a MoU leveraging for chain, to a LNG of hydrogen in GasLog's network

Our the commercial million this to we over for LNG, pipeline potential officially incremental opportunities. our facility facility a is and marine month ago, million. pipeline exploration Teddy for added rail we X have for commercial opened $XXX an of $XX base facility Since the

you biological we in see on XX, opportunities few. PFAS, and serve macro XX As name Currently, pipeline, have a contaminants, to solutions can arsenic, for treating that water, have the in Slide discussed commercial we products processes tailwind including PFAS. we our

since those of year. beginning XX this are of Specifically new the

been numerous have stated we've business. Howden the year, over many our times of benefits there As past addition to the

order XX%, become list over mix revenues growth XX. of growth is One with opportunity, larger on this total the of business on the the Slide our top a shown set to consistent in sales medium high-margin part the first of of term. have aftermarket and our we're quarter is in expanded as XX% the RSL XX%,

I'll outlook. to over talk about now it XXXX and medium-term Brinkman to hand our

their Slide aluminum out XXXX Thanks, relatively lower XX, key and and we section, supply Carbon, Generally, stable the have the Jill. and normalized our years. each round over from near drivers inputs. we On X main are in stainless show the these chain past saw XXXX. all highs to points

given it carefully Red cost date. the seen have very meaningful watch to continue We yet changes situation, to Sea not from

Slide Turning XX. to

and first in With we being internal just with the and drivers XXXX quarter based of our expectations, went the we our our outlook. line key on reiterate macro through, foundation specific results

November introduced positives, our in early is update Slide existing when modeling considerations Under for have based tracking our that XXXX XXXX. revenue XXXX you're an so to XX production on slide in we certain facility, a begun for Teddy we is X backlog. well

sizes, content. Additionally, we larger towards XX Howden a outlook next of approximately are for and trend XX% backlog, our seeing we project have in months covered especially

QX originally X our synergy and stated expectations surpassed year anticipated. than we As Howden commercial cost on our call, earlier earnings

the column, worth We financial In X and as revenue X our that XXXX throughout we achieve ramps quarters revenue are hubs to play they year on is year not underway projects specific limited XXXX. be few larger deployed. When QX the out, to there you to the items are additional but while about Teddy to, year, the U.S. later the targets, a middle realization our noting of how are XXXX, hydrogen on consider, our synergies. further dependent the not backlog potential in incremental and synergy including, backlog half the in in having IRA it X of well benefit year are into that will back came we into anticipate sequentially timing think

You our can on see on targets capital invested Slide XX. return

ROIC for our X%. is jumping mid-teens off outlook of X-year a point medium-term coming average Our from approximately last the of

our made reaping significant to accretive of Howden our portion a is now and have with to shift of the We and to less the investments benefits. organic we company and our inorganic associated growth in a days and in early repair. higher cyclicality business are for position service aftermarket ROIC, have

we On XXXX outlook previously again had financial we our November reiterate and January reiterated shared XXXX. in Slide medium-term as in XX,

last us. other global mix a Price/cost higher services and positive to installed industry full gross today, up now our chain for a just incredibly and than have solution continues the our entire profit revenue year but business and of as nicely and globally. and aftermarket a IPSMR least, broader across ago to a these, an We midterm LTM and and the targets. not including Volume, a driver XX.X%, at Chart we moving heard achieving mix is benefiting is we on hydrogen, base. continue, basis, excellence demand track LNG margin to are be are is and multiple And we international. and have as reach of from on We contributors large, well modular for approach value certainly activities we an target our XXXX play you've to mid-XXs diverse have productivity going

work with possible. Thank XX% team, of and while to or XX safest months you Keep our the to without operations. quarter orientation, communities X in total stakeholder team around who strong recordable having world of our year entire record Chart our a safety rate synergies a a deliver recordable X.XX and first had locations way continuing the to and incident. one global giving incident the more delivered momentum, back ethic with

again you [ thank So it open ] up to One Yna, global team. the chart for please Q&A.

Instructions] [Operator first Your Rice. Johnson Martin of from the from line question comes Malloy

impacting bit ways. some more the just I and about the you segment, quarters Is and growth to the question, to this. in just through try there monitoring RSL equipment different more maybe the wanted could order centers that service First outlook. I are the delivered drivers this about all wanted runway ask acquired Howden, there talk little you -- the several that you've putting to of a in of if equipment And through

talk that a If bit. you about little could maybe

runway our And we've revenue Chart the X leaders by one of drive base quarter. created still as We year going to from that together to the in that other of a Howden. and Absolutely. to team installed prepared gem we're actions to that. what activities uptime one remaining There's of did the here, of real pull Howden And things the base. thanks synergy operations of this we're for Labs doing advantage throughout a as a digital exists of as year global we that through in installed underway growth all Earthly take well runway orders the from double-digit of segment, starting X the digital with have and first RSL. going dozens sales part legacy with here. ranging really connection did commented in time aftermarket is the uptime brewery we've I in continue of had past is I There's it led of a remarks, quite the our mean, bit

an as so opportunities like that there's example. And

had of In the in RSL, Americas. terms drivers efficiencies we the impacting opportunity we strong ahead. so a had continue the in very operations that see margin manufacturing mix first we strong In very quarter, China, and

our thing drivers we world of of a key serve the this why Chart terms a real happening double-digit the clean continuing mines is air, first versus the and mining and have of and contributor. retrofit locations, seeing the strong and little service decarbonizing we the build some repair we really toward segment demand in facilities In because the existing for, to as also of seeing existing some in need And the of push in see America deeper bit I EU customers driving to would then retrofits demand, like that is just well. ability many a new their particular, hotter, legacy is again, we activity LNG global in on We're say are in North facilities where lastly, are had footprint there.

new for water means then Chart to I plant? and And it side kind that regulations EPA potentially able about municipal a second Great. talk you're water the terms in of sell the to what Okay. into scope my to of question, wanted and the

Yes.

targets certainly, business. the over technology as PFAS catalyst to had that Technologies the commercial X in any -- last increase we are regulations to for our the our going contaminant a years, So we've added in be area this well one. to bring new an particular. acquired the we Recall the across is capability going is water this one added treat interesting And really set as BlueInGreen, EPA in back, believe pipeline. The the an And board. are Water and

our in through fact are order talking and out total of least of it about see you're of says at to the about the private-sector What Certainly, does the the them? But companies sheer it. opportunities in book think and that of that trying commercial steps people I beginning doing. what year XX to are since the the figure activities. out that thinking the are little terms to a just to take we had mean of time bit they're terms of flow going pipeline XX enter this new

well So specific I and for to PFAS, arsenic. to not positioned view also of international lot us rather do to We're really but to that. it as -- we're seeing not a a medium-term catalyst opportunities

that And well, really seen ahead. so months international for system last we've our targeted and we're some good over with as -- treatment pipeline orders is strong very the XX a

So a while percent our in support business, low is of digits, And total a really for the water growth exceptional. is there's single-digit not like ahead doesn't that. runway single macro tailwind that

And Marc comes from your next question from line Cowen. Bianchi TD the of

wanted I the start to with orders.

the So but -- here there solid contributing. in that items were didn't it any orders quarter first there seem like were large

of of question level the big large So orders items progression, about I think sort think baseline look a the then LNG had and at and last I year-over-year you it. year, then can when this add in is that to we to is good some

XX%. take of like And kind rate the out, growth I is if that

outlook sort maybe a pretty seems could but what that high be? rate that the and base level, for base level should for talk So of the you about growth

especially Yes. people's And strong in broad-based just Thanks, for spend coming normally a have wouldn't quarter, We a definitely in off seen of Marc. such QX. QX QX. order a

robust good see. a demand that's indicator we that So

get the not One frequent an more that medium-sized our on business we're in LNG terms more just and example or or is starting oriented of to markets it's an is into solutions the dependent that products kind are of happening project-oriented that as orders, is we're of example. end taking things as hydrogen just the now high-growth our

say want sight do there have I we pause of order a strong good line hydrogen to on really activity. QX and

to So I expect going that's continue.

that always that projects to called large We hard historically LNG the really out the there's because its kind of only more now was multiple in the of size. markets. end thing Big out. in it's And had call So -- consistency medium-sized

your I robust so And expect continues. demand question, would that answer directly to

back the $X quarters, the X think, above. you were X If X or look of over billion I last,

one of regular book-to-bill So one -- I on consistent proxy that's the kind it the kind that a book-to-bill or on use of basis.

look other in large and look fourth the QX, did the Big QX pleased orders the were correct, very we oilfield and off coming LNG of absolute when just industrials quarter. project such large to a the you're quarter, kind quarter We metrics you you From in up LNG, and of with companies, at peers are 'XX. we strong first though, especially other having activity activity, again of first pleased, X%, have at it

Yes.

then And I was free one cash. had just Okay. other the on

So if million second going $XX that's you're the to in $XXX for do million approximately. the half, quarter, first the

there to really And that's be the conversion which expected some $XXX what to back exceptional I guidance. half like of to think You'd half. need -- in be million midpoint the half EBITDA, has high a back doing of of the items the is in consensus back there's for

Maybe there in of EBITDA of conversion this the noise? the ought Could are run be, all you when rate talk in seasonality about and past supporting sort we be inflows back Howden half outlook. some cash the get that there's what those might if there one-off to are what

Yes. Okay.

in capital, nothing that I'm line sight working our would kind that take inventory and we the good timing. our AP, just AR, between the going movements What working of do business. it outside to in capital first to stepping So part right? your is have question, say quarter-to-quarter of fact in There's I hasn't we pieces, have of We Marc. try of normal CapEx to of spiked, have

and things we milestone in had point just down Slide half payments of project the our of also XXXX. I'd CapEx, we X first payments. on that in particular, XH that the some around is going CapEx to on to from project QX So step talked about

that. are for or these anything done. material They're like for buying payments work So payments not

the So that we called quarter. out a few for second there

the how is your coming you 'XX our think, CapEx really I last ramps into year more outside that conversion cash. XH based Run If that step of that kind question. course QX and -- rate drive kind of backlog part on will in #X look normal 'XX, QX from down, of of at the projects was, on higher sequentially XH

free cash as flow as So of sales percent kind mid-teens look and at our of it yes, we target. is a

Evercore. comes your of question line West James from from And next the

So execution, are terms relative orders. peers industrial order, first really global who especially nice quarter of all good down to in your

and wanted in you But on seeing of really move to to kind go like we've you're agree you're because if to CCUS. you my terms seems highlight -- of first if is of it's kind curious CCUS had now. and of in that I just with this and So And hydrogen and it curious and think kind both gets of actually starting hydrogen, pulled are what terms starting back what demand of forward that's well, that. kind what and and you in pulled around forth first seeing starting there question And of it's that's well, get forward tandem multiyear what kind of both to demand?

all first and the absolute on first Yes. James, Thanks, of quarter metrics. callout also thanks for the

You're those. extremely you pleased with at look CCUS hydrogen. and When

summarized and, together. perfectly seeing, both cases, to we're in you some increasing think terms in be it I activity seem of what where in they

that. our highest in quarter ever quarter of an order CCUS is first Our being indicator

we're bit what And the and for portfolio million getting You I than we're that seeing to been it's what was our Earthly I've we in say is million that now anybody because $X.X X view $X interesting little million now size know rolling. orders small our call the better projects. Labs which that's a $X is increasing. seeing talking scale just originally from orders, get super to CCUS we're But would slow now years, been to real offering,

the center this. with part increasing. And is continue of with stuff path of I to an opportunity you down So think see of of there's correlates getting Then going to like And the with it's that centers. the scale to CCUS that. need data start a that amount and immense how data be key for CCUS the you're yes, all associated respect

industrial to mainly and ranging Observer Hydrogen, we've in amount me, fairly with of hydrogen projects coming because has we it projects. is and seeing very in pleased transport liquid fourth to of historically, like But Europe I activity first that real Energy seen fact number storage compression heavy and going correlation truly hydrogen for aside infrastructure. quarter be we're the behind you're truly was now hydrogen consistent. is into hydrogen, too, real liquid liquid from been highlighted setting play. we're global, onshore the money absolute dollar heavy-duty them, the and a with The quarter Europe mainly for the seeing infrastructure gaseous some Europe. That one hydrogen because interesting tanks to the see now starting the

all of do a that get So you FID. do The fact we the of to carefully people hydrogen good to and have thing want them momentum. that in projects is not lot watch that

of so there funding something financing projects that carefully. these watch And available, ensuring is for available we types is that

going projects do next see to start of that they're you terms those get to the this here year when some less early to chain. later And or deployed then going the think we pull to are very -- it's hydrogen my in X, last the do supply orders States, likely hubs of you a long around in comment that the answer realizing United the

Right.

Okay.

to and of with pickings think margin the you here, a the have go The Okay. Got the margin? much on guys performance higher. And know do quick quarter. follow-up for easy still just Howden to benefits And in margin stopping maybe Or performance. you're curious, me there was and room it. then to to is we and respect more I guess, the increased And full aren't take that going excellent here see some, I we in seen margin the how have you aftermarket margin But margin. yet?

Brinkmann So There and mid-XX% on ahead that. have is well the much our said, well, more as gross we to here. definitely, which margin is way medium-term outlook, that

and cadence now I think let's great kind and is, seeing in what year of we're Howden okay, a see now X we're optimize. was you what with

there's where it the fruit, and at look X, low-hanging about really Let's optimization. efficiencies where and now it's year -- really was

A good to couple as we of our operate opportunity together. the a had we regions consolidate example is internally

business seen it's we're associated on in across it's to business that And margin in have equipment it. And movement and period because that -- million getting And an year, a the technology above our so a with for sizes in for getting example. side we particular of actually is good its Howden before the $X there's that number presidents one I because quarters profile own engineering order." savings having commercial there And think project to the larger, for more I been solution think on had the project a go. typically many But are between number pipeline our somewhere you historically the just projects with other million understand a having if not "I've get, X-month have chatting full this was that really more thing that is big it with are content notes room $X XX-month our while or that been hard Howden. a certain would years. never work, periods our of from look entities the business we said, he and of I definitely of Howden as

project total portion even -- for now, that size But getting is them of larger. the is

my So your in do wanted it project something question of goes like exactly growth what not that LNG of us or terms big tons of if away helping have in terms terms that. to then of to whipsaw it's last opportunity. answer And is and done a aftermarket, margin, RSL cyclicality we in

of question Ben the next Nolan from from comes the line And Stifel.

couple. have I a

settle you XX%. it a what revenue a out? and over what first, that -- wanted think, an area could do The is to things you're after out it's where mix it's will it a little from at to be assumption Jill, the I Longer now, you clip. pretty acquisition. back some of be growing of what the it's the But I is mean, think I good what do revenue Howden RSL of fair half term, go of or the benefit for RSL synergistic probably capturing X/X most appreciating

curious Just how we you're thinking where land. about

Yes. expected -- your Thanks more. I I take I'm take opportunity I the we be of we things. service presence In volume either also help ahead to market it. do -- on more somewhere great what question, in in construct I'm for a it's done Ben, lot our about the mean or the in the just the the XX% build the first-of-a-kind excited you really or you go first-of-a-kind repair of about that's types and, term. based it optimal long new and for And on a lot in RSL There's that is -- where callout we on cases, build to aftermarket it's with for took said, side. But see an I tail have, to business. it market side. if rates, kind ideal be But like a and would RSL. excited the we do for side those split the to make as the innovator be an see some to very we of historically, do we clearly question that's take just the for thanks here. of an math get the we see And the a that What to new because first-of-a-kind that's think longer world, aftermarket really now growth a of get

was carbon And And pricing a then know for that, some and of the other years an things like ago. Okay. steel. we No, seen I issue that's couple have question is, that helpful. elevated aluminum

time, whether you see an with gap any element just at a the You we there cost how increased stands Could risk goods costs. guys anything little is of of lockstep those that to, Or there or steps maybe that? through of increased like that should ensure took bit pass timing a in if sold? is you pricing some talk could through and

Yes.

lock place are at the we've changes quite -- nearly order in well the to the cost for the As carbon, we're in of us thereafter. the -- that time very the able We're mechanisms talked Ben, from pricing we in have protect before, steel, aluminum. specifically, projects

susceptibility we have steel aluminum an too has very the in carbon of Like Aluminum had recently we a largely uptick market has alarming. to the nothing stabilized. and had So little swings. bit deck, little but

to we're in those in positioned So along pass costs well increases price/cost. the

about cost frame labor, of to clarify, the much just cost assume And those just it. is of of it's Okay. commodities how sold. most but to goods in I the

commodities? X Those

with Well, a basically, goods your of how cost slug part sold -- your is of of commodities big your it? as

cost, I XX% Ben. would say it's of less than the

your next from question Read comes Wells of Fargo. line And Roger the from

the up Yes, to on medium-term I'd talked of about EBITDA targets show some -- margins the QX and did guess, Joe, maybe, gross I on just and getting you the stuff margins the and the like progress ultimately that.

have orders, and to the you part for how you with is of disciplined there. productivity that have, you Like as the that's the there. the getting visibility developing? you now holding the and in that backlog As mentioned that Howden how is a price/cost backlog also What part then that had within does you've within orders that's that, the And say year? fit as look

covered the increasing Yes. XX Well, of EBITDA cost there. on months good and visibility margin got just firstly, XX% we've the here, billion got $X and of price/cost on here, over over we've in time the -- and next backlog, visibility -- the

going got being here, cost results we've here. comments, as quarter earlier and is know on we've a where got our margin we we synergies progresses our more roll-forward -- baked of realized So basis. our the in Then highlighted as every into

highlighted you I Chart then like just have that's Business as And additional constantly. out will. we margin cost generating So tailwinds, Excellence, if well,

So very strongly we our medium-term outlook. feel about

us just point other helps One the that naturally to increasing there. is RSL mix of

definitely. Yes,

Yes. mentioned. in has of No, out, of you great business steadiness, terms some taking that seasonality that been the as

that free haven't merger, flow free conversion flow from I about conversion? XX% but the numbers that with right cash quarter, was the seems think pretty expect we to flow it quarters here were generation you way the see every work what's put strong, cash XX% cash margin free that's The going at other how mean, improvement, of but question of in I'd the back terms of first explanation mean I lot to but like to to. I cash and few time in you had mean the -- in a deal. tossed And the factors forward? different XXX% to obviously, generation we in How flow QX. Howden the flow. I go as in come here don't to onetime seen to cash what around,

other how that think the with items on that I'm along the seasonal does that basis. can payments, a -- include come about So expense curious interest just the to occasional

Yes. for Thanks question. Yes. that

the on as my to next commented what be that to really I try that it's given through visibility taken to say, we've year prepared explicit at first in and heart what give business look we're to a seeing. feedback of XXXX, of I we think the would like, combined we I taken important more that clearly, kind least to need full remarks quarter does one. that have the it's our

metric your medium-term of conversion in to going point ramp we a percent bit cash and it's little extremely that QX. think the itself does kind on how items take But that different talked goals the between interest take stair like XX-plus the all of valid there. get of topics the in stepping referred on to you is into I we quarters about these to account to

that we helps profile that XXXX, drives our mid-XXXX, pay X.X% the we've to Xs continuing ratio But that on So term, to the increasing is EBITDA down leverage our that a before. X% -- near the point. the get we target. But margin the in debt, to said ramp certainly, and the high so fact target discipline that, toward to said to net in anticipate

to feel really there's get pay way synergies more a So that. there. and there and there's out to a us that also, can continue seeing continue to deliver drive we to there, that down good debt that get there's we're path to more margin, help requires It

with the would year, the Yes. $XXX to QX of cycle And we're in that for as But million we in expect I here. the range. add in coming off just CapEx just more a pretty spend significant comments, that, highlighted million -- we earlier $XX

additional CapEx that towards finishing percent the expenditures a of to drive sales here come large some throughput, needed down just very we're this CapEx as spending XXXX. add is the backlog, up sales of on to the which and convert going and end into year So will

that. like mean, you Appreciate from mean, I what we're the I Okay. trends are than much others. for Yes. all backlog said earlier, order better right, seeing James

the good But So right? step, and thanks, luck. next conversion,

Thanks, Roger. Appreciate it.

the from [Operator next comes Eric Stine. question of your And line Instructions]

something with want kind So a contrast little past, know you maybe know earlier, And where you've is viewed Is you could in the ahead. development? of a on maybe XX maybe of its is be I is think touched you repeatable, are we bit. here you've months quarter, just to to that? go this but back going and now just thinking given it hydrogen kind how and predictable I commentary, to business? in Do of think hydrogen starts how stops it Just of actually still what, this kind more -- XX it in with you discussed capture advance about carbon your that? to it is, it where contrast

did had we develop folks but certainly, I out because pleased ahead. Yes. them than here we know because longer think will Yes. took And about years. we have it lot X.X -- it FEED followers, relationships that move Thanks it really pre-FEED are in for you some I we technologies that early pointing as us talked it of anticipated, the our you of to long-standing when get as allowed and the know for with we're a to of -- one

that business related people last of which the doing think easy-to-install debated start that economical, solution X to our think from talk our actually share we're it enough do is hear you kind bit tangible. it's guys day a to traction statement, definitely water to to or artificial discussion can starting that. we of be on didn't it it's few because jumping But at Earthly, going starting to some I quarter, we're starting traction carbon point also and had qualitative for off but -- as that taken the was they're about global you you've I get That all was pretty the as it's here, percent We actions. a capture. I demonstrations and definitely pipeline before to pipeline have, that talking We carbon ready carbon close So this scale see about energy-intensive longer. because point. increasing real shortages. solved intelligence case, -- and an of to that's internally is capture okay, little what's larger that a to is The metric in got it got on you a how had damn in what to a of and really, think being but great capture, and sticky on that COX give these years now all we've total

catalyst. would kind And hydrogen, of, near-term what so to XX I that's it's accelerating. behind relatively think it think a Is I XX I months also say,

my record, from with So we're we of it in accelerate. years a the year. place capture it as behind that's this into kind rest opinion, of really off but seeing And being carbon X in orders was a hydrogen head to jump QX good pretty certainly,

And capture Backlog of year then on up. a for has have sequentially ever capture since carbon stepped carbon in quarters, is record yes, capture. obviously, given last the doubled carbon maybe had, up quarter it's my we you got the data backlog highest we as stepped point for but or our end of first ago sequentially than essentially

comes of the from Markets. your Lake Capital from line Rob Street next question Brown And

And rest on, focused how Just see that the guess, wanted the out sort I playing year side. effort What's for cost the the of do key year? up X kind the on? to synergy you're of you follow of on areas

well to we certainly not in which year toward hit get ETR in from where we number coming synergies, the that I going and know of there side, benefits, in on benefits supply $X really we that early cost X can also keep into right, audit And only costs like year for synergy at our fees, couple you around if billion I've both larger and type applicable, or let where as and a and heavy years of low-hanging one commercial things we're restructuring orders, and here where okay, were his audit because way it's when achieved just the externally, around think, call, you said cost in different like our our a entity the tangible interesting in It's Joe, which fruit, standpoint, on -- we we're the fees quarters, but now XX on we'll we're earnings said be base, and on quarter. Yes. next next X. to hitting few QX cost was that surpassed commercial where like comments facility consolidations costs rationalization savings you optimize X, entities things referenced auditors thing. tax there. And statutory is had going

So businesses, the coming to throughout more to advantage new we'll lots of ideas. with And more that cost of synergy different taking know the the activities, up but we also talent continue optimize. they're and I get the we're think

tracking cost commercial So original for model acquisition our we X as be track year to the target today on of for are and from loans.

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

is in boom PetroChina LNG whole company. transportation And China? of I biggest flagged remember we ago seeing else? was Or LNG caused your by You the Chinese the another decade orders. customer a this when something Are

We customer. it's transportation perhaps of are one seeing not I But prices. recovery, boom not though, so advantage lower particular infrastructure. with it definitely call this gas a a yet, concentrated LNG like very broad-based, I'm any sure natural is taking

orders side. multiple seeing in we're the trailer So to, related particular, LNG

is part So say, are everyone's customers a be to source. it's saying natural I to for think mix, of their couple years Well, it's I everyone. having last energy continue let's their our and fact of reflective the speak but gas guess also of view. broadly, can't that reflective I the LNG of infrastructure But going lower key been their

we'll transport. in that think of for ISOs I particular type So that terminals, thing. on infrastructure continue to LNG, movement import And see

from comes from question next line Manav your UBS. And the Gupta of

Element relate both And this with I -- get Services. a renewable with I'm details little assuming could Can details you more GasLog we order or to hydrogen? Resources collaboration around give so green I on the little then us those. hydrogen, around more get details guess, more LNG

for you question. Thank Yes. the

the in additional California. being their future examples of is great -- then me would the progress in expansion. land point are of their liquefaction California. And project breadth additional is city different I And Lancaster, Element being applications. the of what That well, I terms last of just think purchase for -- we X also the let first, of announced and different in out used along hydrogen for those further geographies, week, recently, they acreage Lancaster, site for So

in has and to U.S. certainly, similar hydrogen now economy to So that think, I around United here take opportunities of the reflective seeing kind specific good that's there hub we're the And going structure being traction of how started the California. States. future

future decades earlier of so -- Element molecule Resources, a strong -- then opportunity with that and more is us for side, to days. this does future has And is the This not have and an that partnership. And oil it business GasLog disciplined they're leadership related then and there very both order on experience. This is in yet. so

of on XX holding on. being was it and is and focused hydrogen what was, at that liquid hearing this in ahead December infrastructure we started so And the for in 'XX COP large-scale

in was particular. everybody talking that, to for ammonia prior Whereas marine

see, is, marine I heavy-duty cool for Manav, the infrastructure thing with wrap So answer I like this about the ship is cool work transport and associated infrastructure. across -- my larger-scale on can part industries. together out, part, I'll onshore transportation this around the onshore And this

or And just Energy Observer on right their going converge and future immense with we're on GasLog now studies these done this of aerospace on an as and so with leave or itself side to amount an This infrastructure work an the us example theirs. marine on people having opportunity. while is

to in specific about siloed we're thing toward see transportation gaseous that heavier other market GasLog traditionally partnership is longer hydrogen distances, is to starting our liquid. turn again what which was very Europe decarbonization, is a The

last your from from question comes Sachs. Goldman of the line Modak And Ati

capture carbon today. a spoke about you Jill, lot

with the quarter up to lot initially was Earthly theme. is larger, thought given getting like Labs scale. see. SES It the seems keeping industrial So is I driver the But great its in which a

you SES orders particular forward? to and provide that any we are color curious commercialization order So close in how in on increase going on can and

Yes. Thanks the work really very for Earthly the we've done SES the and making the and question, internally sausage closely Ati, together. kind and teams haven't good shared What externally, point. but of

gaining good other you're there there SES So work not of to traction. We SES' help their that able global point SES commercialization. I'd of kind bit quite particular, scale agreement. them of and did in larger cite in traction the near-term in There's to UAE numerous at up of of that's kind for speak cement bit opportunities for the done. expertise and that to end We're just others SES Earthly the we're market end things. seeing quite toward under NDA line Graymont is application in a seeing of on being a side definitely so the Really publicly

comment markets point your our We've be is is kind and we large makes have that a refer our going that that which and to this what carbon extremely SES to starting sense on Howden's capture maybe from while into biogas one to pull-through for play was learned to sets yes, our my to SES the end lot equipment do come money pull of was And through. and scale. applications. right? also customer solution last kind So there, of goes is or to really SES/Earthly valid, different do. And market this end it to technology carbon separately, it Earthly capture Initially, about for see a them

getting legs orders We've some there. had that's So as well. few a

time. no at please this further Evanko, There Ms. proceed. question

for call Thank as thank We on, to our day. the you your providing you. quarter and much, I Have a goes time Thank look attending and everyone great to this you forward appreciate very you today. updates morning.

Thank concludes That all participating. for today. conference you our for

disconnect. all You may