CHART INDUSTRIES INC (GTLS)

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our results of operations and financial condition should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements. Actual results may differ materially from those discussed below. See “Forward-Looking Statements” at the end of this discussion and Item 1A. “Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with this discussion.

Overview

Chart Industries, Inc. is a global leader in the design, engineering, and manufacturing of process technologies and equipment for gas and liquid molecule handling for the Nexus of Clean™ - clean power, clean water, clean food, and clean industrials, regardless of molecule. The Company’s unique product and solution portfolio across stationary and rotating equipment is used in every phase of the liquid gas supply chain, including engineering, service and repair and from installation to preventive maintenance and digital monitoring. Chart is a leading provider of technology, equipment and services related to LNG, hydrogen, biogas and CO2 capture among other applications. Chart is committed to excellence in ESG issues both for its company as well as its customers. With 64 global manufacturing locations and over 50 service centers from the United States to Asia, Australia, India, Europe the Middle East, Africa and South America, we maintain accountability and transparency to our team members, suppliers, customers and communities.

On March 17, 2023, we completed the acquisition of Howden (the “Howden Acquisition”), a leading global provider of mission critical air and gas handling products and services, from affiliates of KPS Capital Partners, LP. Results from continuing operations include results of Howden from the date of acquisition and exclude Roots™ (“Roots”) business financial results for our entire ownership period of March 17, 2023 through the divestiture date, August 18, 2023. The financial information presented and discussion of results that follows is presented on a continuing operations basis unless stated otherwise.

Macroeconomic Impacts

Geopolitical instability continues to create uncertainty in the global economy, including the current conflict between Russia and Ukraine and the related sanctions imposed by countries against Russia, along with the heightened tensions between the United States and China. Moreover, unrest in the Middle East may impact our business and operations and has strained global supply chains, including those dependent on Red Sea shipping routes. Also, a substantial amount of uncertainty exists regarding the impact of international monetary and trade policies on our business and markets, including possible continued volatility in interest rates and inflation, as well as the unknown impact of recent or threatened changes to U.S. governmental trade policies, including tariffs on China, certain products, and potentially other countries, as well as the possible impact of any retaliatory tariffs on products from the United States. Additionally, geopolitical uncertainty regarding energy policies may affect the timing of certain projects. We are unable to predict the impact these actions will have on the global economy or on our business, financial condition and results of operations. These events did not have a material adverse effect on our reported results for 2024. We continue to actively monitor the impact of these macroeconomic developments on our results of operations beyond 2024.

Environmental, Social, Governance

Chart is proud to be at the forefront of the energy transition as a leading provider of technology, equipment and services related to LNG, hydrogen & helium, biogas, carbon capture and water treatment, among other applications. We also have a unique offering for the Nexus of Clean™ – clean power, clean water, clean food and clean industrials. Reporting our ESG performance is one of the ways we demonstrate accountability and transparency to our team members, suppliers, customers, shareholders and communities. Further information can be found in our Annual Sustainability report which we expect to release in April 2025.

2024 Highlights

Comparisons included in the discussion that follows are for fiscal year 2024 versus fiscal year 2023. A discussion of changes from fiscal year 2022 to fiscal year 2023 and other financial information related to fiscal year 2022 is available in Part II. Item 7. Management’s Discussion and Analysis of Financial Conditional and Results of Operations, of our Annual Report on Form 10-K, for the fiscal year ended December 31, 2023, which was filed with the SEC on February 28, 2024.

Strong order activity contributed to ending total backlog of $4,845.1 million as of December 31, 2024 compared to $4,278.8 million as of December 31, 2023. We had consolidated orders of $5,006.8 million for the year ended December 31, 2024 compared to $4,140.2 million for the year ended December 31, 2023. The increase in orders versus the year ended

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December 31, 2023 was largely driven by strong order activity in Heat Transfer Systems, Specialty Products, and Repair, Service & Leasing.

Consolidated sales were $4,160.3 million in the year ended December 31, 2024 compared to $3,352.5 million in the year ended December 31, 2023 with growth in all four segments when removing any impact related to foreign currency fluctuations. Consolidated gross profit margin for the year ended December 31, 2024 of 33.4% increased from 31.0% for the year ended December 31, 2023. Operating margin for the year ended December 31, 2024 of 15.6% increased from 11.7% for the year ended December 31, 2023. The increases in gross profit margin and operating margin from the year ended December 31, 2023 were driven by our continued execution of commercial and cost synergies, improved mix of the business as well as improved selling, general and administrative expenses as a percentage of sales.

Operating Results

The following table sets forth the percentage relationship that each line item in our consolidated statements of income represents to sales for the years ended December 31, 2024 and 2023:

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(1)Includes share-based compensation expense of $18.9 million and $12.6 million, representing 0.5% and 0.4% of sales, for the years ended December 31, 2024 and 2023.

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Consolidated Results for the Years Ended December 31, 2024 and 2023

The following table includes key metrics used to evaluate our business and measure our performance and represents selected financial data for our operating segments for the years ended December 31, 2024 and 2023 (dollar amounts in millions). Further detailed information regarding our operating segments is presented in Note 4, “Segment and Geographic Information,” of the consolidated financial statements included under Item 15 “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

Selected Segment Financial Information

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Results of Operations for the Years Ended December 31, 2024 and 2023

Sales in 2024 increased by $807.8 million from $3,352.5 million to $4,160.3 million, or 24.1%. When removing the negative foreign currency impacts of $27.1 million, all four segments’ sales increased year over year. This increase was driven largely by Howden results impacting the entire first quarter of 2024 versus a partial period in the first quarter of 2023, commercial synergies achieved in the Repair, Service & Leasing segment, strong execution of the backlog in Heat Transfer Systems as well as higher sales in Specialty Products.

Gross profit in 2024 increased by $348.4 million from $1,040.4 million to $1,388.8 million or 33.5% compared to 2023. The increase in gross profit was primarily driven by higher sales and improved margins, which were largely attributed to a higher mix of Repair, Service & Leasing sales along with improved productivity. Gross profit margin of 33.4% in 2024 increased from 31.0% in 2023. The increase in gross profit margin for 2024 compared to 2023 was primarily driven by a higher mix of aftermarket service & repair work and achievement of both cost and commercial synergies across all segments.

Consolidated SG&A expenses increased by $61.1 million or 12.6% during 2024 compared to 2023 largely driven by Howden results impacting the entire first quarter of 2024 versus a partial period in the first quarter of 2023 as well as higher information technology related integration costs. Restructuring costs recorded to SG&A were $12.5 million and $13.0 million. SG&A expenses as a percentage of consolidated sales for 2024 decreased by 1.3% as compared to 2023 primarily due to continued cost and commercial synergies achieved.

Operating income increased by $256.8 million or 65.7% from $390.7 million to $647.5 million compared to 2023, driven by a full year of Howden included in the results, the increase in sales, higher gross profit and associated gross profit margins. Operating margin increased from 11.7% in 2023 to 15.6% driven by cost reduction and productivity improvements as well as better leverage of the fixed cost structure of the business.

Acquisition Related Finance Fees

Acquisition related finance fees for the year ended December 31, 2023 were $26.1 million related to bridge loan financing for our acquisition of Howden, which did not recur in 2024.

Interest Expense, Net

The following table presents the components of interest expense, net (dollars in millions):

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The increase in interest expense, net, is primarily due to higher borrowings outstanding, specifically our term loans due March 2030, which were outstanding for a full twelve months in 2024 as compared to nine and a half months in 2023. Furthermore, interest expense, net for 2023, included $21.5 million in interest income earned from deposits of proceeds from the senior secured notes due 2030, senior unsecured notes due 2031, common stock and preferred stock offerings into interest bearing accounts until the consummation of the Howden Acquisition.

Other Expense (Income), Net

Other expense (income), net decreased by $17.0 million from $17.5 million in 2023 to $0.5 million in 2024. This decrease was mainly driven by a $25.1 million decrease in unrealized losses on our investments in equity securities and a $7.1 million decrease in losses on extinguishment of debt. This was partially offset by a $13.3 million increase in other expenses, primarily driven by a $7.8 million loss on sale of business in 2024 for customary closing working capital adjustments, which related to the sale of our American Fan and Cofimco businesses and occurred in the first quarter of 2024, compared to a $4.6 million net gain on sale of business in 2023, which related to the sale of our American Fan, Cryo Diffusion and Cofimco businesses.

During 2024, we recognized an unrealized gain on investments of $10.7 million, which was mainly driven by a fair value adjustment (an unrealized gain) based on an observable price change relative to our investment in Avina Clean Hydrogen Inc. of $11.2 million. During 2023, we recognized an unrealized loss on investments in equity securities of $14.4 million, which was primarily driven by an unrealized loss of $12.7 million on the mark-to-market adjustment of our investment in McPhy (Euronext Paris: MCPHY - ISIN; FR0011742329).

Income Tax Expense

Income tax expense of $78.6 million and $3.0 million for the years ended December 31, 2024 and 2023, respectively, represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of 24.7% and 5.2%, respectively. The effective income tax rate of 24.7% for the year ended December 31, 2024 differed from the U.S. federal statutory rate of 21% due primarily to the effect of income earned by certain of our foreign entities being taxes at higher rates than the federal statutory rate and the build of valuation allowances against specific deferred tax assets offset by the benefits of U.S. taxation of international operations optimization, research and development tax credit benefits and favorable provision to return adjustments.

The effective income tax rate of 5.2% for the year ended December 31, 2023 differed from the U.S. federal statutory rate of 21% primarily due to tax benefits associated with the Howden integration, release of previously booked valuation allowances, research and developments credits and share-based compensation offset of income earned by certain of our foreign entities being taxed at higher rates than the federal statutory rate.

Net Income Attributable to Chart Industries, Inc. From Continuing Operations

As a result of the foregoing, net income attributable to Chart Industries, Inc. from continuing operations was $222.0 million and $47.9 million for 2024 and 2023, respectively.

Discontinued Operations

The financial results of the Roots business are reflected in our consolidated financial statements as discontinued operations for the years ended December 31, 2024 and 2023. For further information, refer to Note 3, “Discontinued Operations and Other Businesses Sold” of our consolidated financial statements included under Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

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Segment Results for the Years Ended December 31, 2024 and 2023

Our reportable and operating segments include: Cryo Tank Solutions, Heat Transfer Systems, Specialty Products and Repair, Service & Leasing. Corporate includes certain unallocated operating expenses for executive management, accounting, tax, treasury, corporate development, human resources, information technology, investor relations, legal, internal audit, and risk management. For further information, refer to Note 4, “Segment and Geographic Information” of our consolidated financial statements included under Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K. The following tables include key metrics used to evaluate our business and measure our performance and represents selected financial data for our operating segments for the years ended December 31, 2024 and 2023 (dollar amounts in millions):

Cryo Tank Solutions—Results of Operations for the Years Ended December 31, 2024 and 2023

Cryo Tank Solutions segment sales decreased by $2.9 million during 2024 as compared to 2023 to $637.9 million. Cryo Tank Solutions sales were negatively impacted by foreign currency impacts of about $5.5 million.

Cryo Tank Solutions segment gross profit increased by $11.5 million during 2024 as compared to 2023 due to margin expansion in engineered tanks and our general industrial products.

Cryo Tank Solutions SG&A expenses decreased during 2024 as compared to 2023, and SG&A expenses as a percentage of sales improved by 150 basis points. The decrease in SG&A expenses in both absolute dollars and as a percentage of sales is due to improved resource utilization and realized synergies in both our cost structure and commercial activities.

Cryo Tank Solutions segment operating income improved $20.1 million or 36.9% and operating margin improved from 8.5% to 11.7% primarily as a result the improved gross margin generated in engineered tanks and general industrial products as well as the generation of comparable year over year sales while decreasing our SG&A expenses.

Heat Transfer Systems—Results of Operations for the Years Ended December 31, 2024 and 2023

Heat Transfer Systems segment sales increased by $144.1 million to $1,035.3 million during 2024 as compared to 2023. Heat Transfer Systems sales were negatively impacted by foreign currency impacts of about $2.4 million. The increase in sales was driven primarily by increased sales in traditional energy and LNG.

Heat Transfer Systems segment gross profit increased by $52.2 million during 2024 as compared to 2023, and gross profit margin increased by 120 basis points. The increase in Heat Transfer Systems segment gross profit was primarily due to volume, and the increase in the related margin was mainly due to overall product and project volume mix.

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Heat Transfer Systems segment SG&A expenses decreased by $8.5 million during 2024 as compared to 2023, and SG&A expenses as a percentage of sales improved by 170 basis points. The decrease in SG&A expenses in both absolute dollars and as a percentage of sales is due to improved resource allocation and realized synergies in both our cost structure and commercial activities.

Heat Transfer Systems segment operating income improved $57.5 million or 32.7% and operating margin improved from 19.7% to 22.5% during 2024 as compared to 2023 through increased sales and gross margin improvement as well as improved leverage of the SG&A expenses.

Specialty Products—Results of Operations for the Years Ended December 31, 2024 and 2023

Specialty Products segment sales increased by $294.4 million to $1,114.3 million during 2024 as compared to 2023. Specialty Products segment sales were negatively impacted by foreign currency impacts of about $8.6 million. The increase in Specialty Products sales was driven by Howden results impacting the entire first quarter of 2024 versus a partial period in the first quarter of 2023 as well as the conversion of backlog related to hydrogen, mining, space, carbon capture and water treatment applications.

Specialty Products segment gross profit increased by $79.7 million during 2024 as compared to 2023 largely due to the additional sales while margin was flat. The flat margin is largely impacted by start up costs associated with the ramp up of the new facility addition in Theodore, Alabama.

Specialty Products segment SG&A expenses increased by $24.0 million during 2024 as compared to 2023 primarily driven by ownership of Howden for the entire period of 2024 versus a partial period in 2023 as well as increased sales.

Specialty Products segment operating income increased by $53.4 million during 2024 as compared to 2023 driven by higher sales and improved SG&A costs as a percentage of sales. This improvement also led to an increase in operating margin from 14.6% in 2023 to 15.5% in 2024.

Repair, Service & Leasing—Results of Operations for the Years Ended December 31, 2024 and 2023

Repair, Service & Leasing segment sales increased by $343.5 million to $1,372.7 million during 2024 as compared to 2023. Repair, Service & Leasing segment sales were negatively impacted by foreign currency impacts of about $10.6 million. The increase in Repair, Service & Leasing sales was driven by Howden results impacting the entire first quarter of 2024 versus a partial period in the first quarter of 2023 as well as increased field service work.

Repair, Service & Leasing segment gross profit increased by $205.0 million to $645.2 million during 2024 as compared to

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2023, and gross profit margin increased by 420 basis points to 47.0%. The increase in gross profit was largely driven by Howden results impacting the entire 2024 year versus part of 2023. The gross profit margin was impacted by synergies achieved as well as field service work that took place during the second and third quarters of 2024.

Repair, Service & Leasing segment SG&A expenses increased by $33.9 million during 2024 as compared to 2023. SG&A expenses as a percentage of sales improved by 40 basis points. The increase in SG&A expenses was largely driven by the ownership of Howden for all of 2024 versus part of 2023 as well as increased sales.

Repair, Service & Leasing segment operating income improved by $147.2 or 72.4% largely driven by the increased sales and improved gross profit. Additionally, the 40 basis point reduction in SG&A as a percentage of sales also contributed to the improved operating margin which increased from 19.8% in 2023 to 25.5% in 2024.

Corporate

Corporate SG&A expenses increased by $21.4 million during 2024 as compared to 2023 driven by a full year of Howden related costs in 2024 versus part of 2023, increased centralization of IT spend and ongoing integration activities.

Orders and Backlog

We consider orders to be those for which we have received a firm signed purchase order or other written contractual commitment from the customer. Backlog is comprised of the portion of firm signed purchase orders or other written contractual commitments from customers for which work has not been performed, or is partially completed, that we have not recognized as revenue and excludes unexercised contract options and potential orders. Our backlog as of December 31, 2024, and 2023 was $4,845.1 million and $4,278.8 million. Backlog is subject to foreign currency translation. During the year ended December 31, 2024, adjustments resulting from translation reduced backlog by $82.8 million.

The tables below represent orders received and backlog by segment for the periods indicated (dollar amounts in millions):

Orders and Backlog for the Year Ended and As of December 31, 2024 Compared to the Year Ended and As of December 31, 2023

Cryo Tank Solutions segment orders for 2024 were $582.9 million, as compared to $608.8 million for 2023, a decrease of $25.9 million. Cryo Tank Solutions orders were negatively impacted by foreign currency fluctuations by about $7.1 million. The remaining decrease was primarily driven by two large rail car orders we received in 2023 that did not repeat in 2024. Cryo Tank Solutions segment backlog totaled $290.3 million as of December 31, 2024, compared to $361.9 million as of December 31, 2023, a decrease of $71.6 million.

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Heat Transfer Systems segment orders for 2024 were $1,467.7 million compared to $1,114.2 million for 2023, an increase of $353.5 million. The increase in orders across the segment was driven by increased orders for data centers as well as LNG including a large order in the fourth quarter for IPSMR® process technology and associated LNG equipment. Heat Transfer Systems segment backlog totaled a $2,097.4 million as of December 31, 2024 compared to $1,716.5 million as of December 31, 2023, an increase of $380.9 million.

Specialty Products segment orders for 2024 were $1,562.0 million compared to $1,341.6 million for 2023, an increase of $220.4 million. Specialty Products segment orders were negatively impacted by foreign currency fluctuations by about $16.3 million. The increase in orders was driven by increased orders in hydrogen, carbon capture, infrastructure, space and metals end markets. Specialty Products segment backlog totaled a $1,888.1 million as of December 31, 2024, compared to $1,631.1 million as of December 31, 2023, an increase of $257.0 million.

Repair, Service & Leasing segment orders for 2024 were $1,393.3 million compared to $1,100.8 million in 2023, an increase of $292.5 million. The increase was driven by the impacts of a full year of the Howden in 2024 versus a partial year in 2023 and growth in aftermarket repair and services. Repair, Service & Leasing segment backlog totaled $577.1 million as of December 31, 2024, compared to $587.9 million as of December 31, 2023, a decrease of $10.8 million.

Liquidity and Capital Resources

Our debt instruments and related covenants are described in Note 10, “Debt and Credit Arrangements,” of our consolidated financial statements included under Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

Sources and Uses of Cash

Our cash and cash equivalents totaled $308.6 million as of December 31, 2024, which represents an increase of $120.3 million from the balance at December 31, 2023. Our foreign subsidiaries held cash of $281.6 million and $170.1 million at December 31, 2024 and 2023, respectively. No material restrictions exist to accessing cash held by our foreign subsidiaries. Cash equivalents are primarily invested in money market funds that invest in high quality, short-term instruments, such as U.S. government obligations, certificates of deposit, repurchase obligations, and commercial paper issued by corporations that have been highly rated by at least one nationally recognized rating organization, and in the case of cash equivalents in China, obligations of local banks. We believe that our existing cash and cash equivalents, funds available under our senior secured revolving credit facility due April 2029 or other financing alternatives, and cash provided by operations will be sufficient to meet our normal working capital needs, capital expenditures, debt repayments and investments for the foreseeable future.

Years Ended December 31, 2024 and 2023

Cash provided by operating activities during 2024 was $503.0 million, an increase of $335.8 million from 2023, primarily due to operating performance and cash management. This was partially offset by higher interest payments in 2024. Additionally, 2023 operating cash flows was impacted by the settlement of claims related to the Pacific Fertility Clinic lawsuits in the amount of $73.0 million.

Cash used in investing activities during 2024 and 2023 was $141.3 million and $3,990.1 million, respectively. During 2024 we used $120.8 million for capital expenditures and $13.1 million for investments, primarily Hy24. During 2023 we used $4,322.3 million of cash for the Howden Acquisition, $135.6 million for capital expenditures, and $11.6 million for investments, primarily Avina and Hylium Industries. In 2023 we also received proceeds, net of cash divested, of $474.8 million from the sale of our Roots, Cofimco, American Fan, and Cryo Diffusion businesses.

Cash used in financing activities during 2024 was $243.7 million compared to cash provided by financing activities of $1,412.5 million during 2023. During the year ended December 31, 2024, we borrowed $3,735.1 million and repaid $3,627.2 million on our revolving credit facility, we paid $258.7 million in cash to settle the outstanding principal amount of the convertible notes due November 2024 and repaid $50.0 million in term loans due March 2030. We additionally paid $27.2 million of dividends on our mandatory convertible preferred stock. In 2023, in connection with the Howden Acquisition, we borrowed incremental term loans in the aggregate principal amount of $1,534.8 million and borrowed incremental term loans in the aggregate principal amount of $250.0 million for general corporate purposes during 2023. On December 4, 2023, we voluntarily prepaid a portion of our term loans due March 2030 in the amount of $150.0 million. During 2023, we borrowed $1,895.1 million from revolving credit facilities and raised $11.7 million in proceeds for the issuance of common stock, primarily to fund the Howden Acquisition and repaid $1,901.2 million in borrowings on revolving credit facilities. A portion of debt repayments was funded with the proceeds from the previously mentioned divestitures. During 2023 we paid $136.2 million in debt issuance costs and paid $27.3 million of dividends on our mandatory convertible preferred stock. We also paid $12.2 million in dividend distributions to noncontrolling interest owners during 2023.

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Cash Requirements

We do not currently anticipate any unusual cash requirements for working capital needs for the year ending December 31, 2025 relating to our existing business. Management anticipates we will be able to satisfy cash requirements for our ongoing business for the foreseeable future with cash generated by operations, existing cash balances and available borrowings under our credit facilities. We expect capital expenditures for 2025 to be approximately $110.0 million.

Contractual Obligations

Our material cash requirements from known contractual obligations include those related to debt and leases, refer to Note 10, “Debt and Credit Arrangements” and Note 19, “Leases”, respectively, within Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K for payments due by period. We also have contractual coupon interest related to our 7.500% senior secured notes due 2030 and 9.500% senior unsecured notes due 2031, which, as of December 31, 2024 totals $157.7 million for the next twelve months and $679.4 million thereafter. Purchase obligations arising from purchases of inventory and services are entered into with vendors in the normal course of business and are within our expected requirements for resource planning. We occasionally enter into firm purchase commitments to procure raw materials such as stainless steel, carbon steel and aluminum. As of December 31, 2024, firm purchase commitments were not material.

We have a Co-investment agreement with I Squared Capital (“ISQ”) which gives ISQ the right, but not the obligation, to require Chart to acquire all (and not less than all) of the shares of HTEC common stock acquired as part of ISQ’s investment (the “Put Option”). From and after May 1, 2025, ISQ shall have the right to exercise its Put Option. Following ISQ’s election to exercise its Put Option, Chart shall pay ISQ an amount equal to a purchase price of either (i) (x) $225.0 million if paid solely in cash or (y) $250.0 million if not paid solely in cash or (ii) three equal installments of $75.0 million under clause (x) or $83.3 million under clause (y) for a total combined purchase price of $225.0 million under clause (x) or $250.0 million under clause (y). The cumulative installment payments are owed no later than September 30, 2025 following ISQ’s election to exercise its Put Option. We have recently executed a Letter of Intent with a third party to assume and replace the Put Option and structure the revised Put Option similar to the existing Put Option set out in the September 2021 Co-Investment Agreement so that the Put Option would not be exercisable until 2028, subject to similar exercise conditions in the September 2021 Co-Investment Agreement. Should the Put Option be exercised in the future, we expect to fund the transaction with cash on hand and available borrowings under our credit facilities.

We have a 35.8 million euro investment commitment for the Clean H2 Infra Fund as mentioned in Note 6, “Investments” within Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K. Funding is required when the fund manager issues a capital call, which shall not exceed 30% of our capital commitment in any rolling 12-month period. We also have contingent consideration arrangements from prior acquisitions with a potential payout range of zero to $12.5 million.

Our commercial commitments as of December 31, 2024, which include standby letters of credit and bank guarantees, represent potential cash requirements resulting from contingent events that require performance by us or our subsidiaries pursuant to funding commitments, and are as follows (dollar amounts in millions):

Contingencies

We are subject to federal, state, local, and foreign environmental laws and regulations concerning, among other matters, waste water effluents, air emissions, and handling and disposal of hazardous materials, such as cleaning fluids. We are involved with environmental compliance, investigation, monitoring, and remediation activities at certain of our owned and formerly owned manufacturing facilities, and, except for these continuing remediation efforts, believe we are currently in substantial compliance with all known environmental regulations. Management believes that any additional liability in excess of amounts accrued, which may result from the resolution of such matters, should not have a material adverse effect on our financial position, liquidity, cash flows or results of operations.

We are occasionally subject to various legal claims related to performance under contracts, product liability, taxes, employment matters, environmental matters, intellectual property, and other matters, several of which claims assert substantial damages, in the ordinary course of our business. Based on our historical experience in litigating these claims, as well as our current assessment of the underlying merits of the claims and applicable insurance, if any, we believe the resolution of these legal claims will not have a material adverse effect on our financial position, liquidity, cash flows or results of operations.

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Future developments may, however, result in resolution of these legal claims in a way that could have a material adverse effect. See Item 1A. “Risk Factors” and Item 3, “Legal Proceedings” for further information.

Foreign Operations

Our foreign operations accounted for 60.1% of 2024 consolidated sales and 51.3% of total property, plant and equipment at December 31, 2024. Functional currencies used by these operations include the Chinese yuan, the euro, the British pound, the South African rand, the Indian rupee, and the Canadian dollar. We are exposed to foreign currency exchange risk as a result of transactions by these subsidiaries in currencies other than their functional currencies, and from transactions by our domestic operations in currencies other than the U.S. dollar. The majority of these functional currencies and the other currencies in which we record transactions are fairly stable, although we experienced variability in the current year as more fully discussed in Item 7A. The use of these currencies, combined with the use of foreign currency forward purchase and sale contracts, has enabled us to be sheltered from significant gains or losses resulting from foreign currency transactions. This situation could change if these currencies experience significant fluctuations or the volume of forward contracts changes.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and are based on the selection and application of significant accounting policies, which require management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. There were no material changes to estimates or methodologies used to develop those estimates in 2024. Management believes the following are the more critical judgmental areas in the application of its accounting policies that affect its financial position and results of operations.

Goodwill and Indefinite-Lived Intangible Assets: We evaluate goodwill and indefinite-lived intangible assets for impairment on an annual basis, as of October 1 or whenever events or changes in circumstances indicate that an evaluation should be completed. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include deterioration in general economic conditions, negative developments in equity and credit markets, a decline in stock price and market capitalization, adverse changes in the markets in which we operate, and a trend of negative or declining cash flows over multiple periods. The fair value that could be realized in an actual transaction may differ from that used to evaluate the impairment of goodwill.

We have elected to bypass the qualitative Step 0 Test and proceed directly to the first step (“Step 1”) of the goodwill impairment test. Under the first step, we estimate the fair value of our reporting units by considering income and market approaches to develop fair value estimates, which are weighted to arrive at a fair value estimate for each reporting unit. With respect to the income approach, a model has been developed to estimate the fair value of each reporting unit. This fair value model incorporates estimates of future cash flows, estimates of allocations of certain assets and cash flows among reporting units, estimates of future growth rates, and management’s judgment regarding the applicable discount rates to use to discount such estimates of cash flows. With respect to the market approach, a guideline company method is employed whereby pricing multiples are derived from companies with similar assets or businesses to estimate fair value of each reporting unit. If the fair value of the reporting unit exceeds the carrying amount of the net assets assigned to that reporting unit, then goodwill is not impaired, and no further testing is required. However, if the fair value of the reporting unit is less than its carrying amount, the impairment charge is based on the excess of a reporting unit’s carrying amount over its fair value (i.e., we would measure the charge based on the result from Step 1). The assumptions and judgment used by management to estimate future cash flows, allocation of assets and cash flows among reporting units, estimates of future growth rates and selection of discount rates are subject to change due to the economic environment, including such factors as interest rates, expected market returns and volatility of markets served. Changes to the assumptions and estimates used throughout the steps described above may result in a significantly different estimate of the fair value of the reporting units, which could result in a different assessment of the recoverability of goodwill and result in future impairment charges.

In order to assess the reasonableness of the calculated fair values of our reporting units, we also compare the sum of the reporting units’ fair values to our market capitalization and calculate an implied control premium (the excess of the sum of the reporting units’ fair values over the market capitalization). We evaluate the control premium by comparing it to control premiums of recent comparable transactions. If the implied control premium is not reasonable in light of this assessment, we reevaluate our fair value estimates of the reporting units by adjusting the discount rates and other assumptions as necessary.

As of October 1, 2024, 2023 and 2022 (“annual reporting unit assessment dates”) we elected to bypass the Step 0 test and based on our Step 1 test, we determined that the fair value of each of our reporting units was greater than its respective carrying value at each annual reporting unit assessment date. We continue to monitor for any potential indicators of impairment.

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With respect to indefinite-lived intangible assets, we estimate the fair value of our indefinite-lived assets using the income approach. This may include the relief from royalty method or use of a model similar to the one described above related to goodwill which estimates the future cash flows attributed to the indefinite-lived intangible asset and then discounting these cash flows back to a present value. Under the relief from royalty method, fair value is estimated by discounting the royalty savings, as well as any tax benefits related to ownership to a present value. The fair value from either approach is compared to the carrying value and an impairment is recorded if the fair value is determined to be less than the carrying value. Management’s estimates regarding future cash flows, selection of discount rates and estimated tax benefits are subject to change due to various economic factors and changes to the assumptions and estimates used throughout the steps described above and may result in a significantly different estimate of the fair value of indefinite-lived intangible assets which could result in a different assessment of the recoverability of these assets and result in future impairment charges.

As of October 1, 2024 and 2023, we elected to bypass the Step 0 test and based on our Step 1 test, we determined that the fair value of each of our indefinite-lived intangible assets was greater than its respective carrying value. We continue to monitor for any potential indicators of impairment.

Business Combinations: We account for business combinations in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations.” We recognize and measure identifiable assets acquired and liabilities assumed based on their estimated fair values. The excess of the consideration transferred over the fair value of the net assets acquired, including identifiable intangible assets, is assigned to goodwill. We estimate the fair value of identifiable intangible assets under income approaches where the fair value models incorporate estimates of future cash flows, estimates of allocations of certain assets and cash flows, estimates of future growth rates, and management’s judgment regarding the applicable discount rates to use to discount such estimates of cash flows. Assigning estimated fair values to the identifiable assets acquired and liabilities assumed requires the use of significant estimates, judgments, inputs and assumptions. Such assumptions are based in part on historical experience, industry and market conditions and information obtained from management of the acquired companies and are thus inherently uncertain. As additional information becomes available, we may further revise the preliminary acquisition consideration allocation during the remainder of the measurement period, which shall not exceed twelve months from the closing of the acquisition.

Revenue Recognition: Revenue is recognized when (or as) we satisfy performance obligations by transferring a promised good or service, an asset, to a customer. An asset is transferred to a customer when, or as, the customer obtains control over that asset.

In certain contracts, we are engaged to engineer and build highly-customized products and systems. In these circumstances, we produce an asset with no alternative use and have a right to payment for performance completed to date. For these contracts, revenue is recognized as we satisfy the performance obligations by an allocation of the transaction price to the accounting period computed using input methods such as costs incurred. Selecting the method used to measure progress towards completion for our contracts requires judgment and is based on the nature of the products to be provided. Accounting for contracts using the costs incurred input method requires management judgment relative to assessing risks and their impact on the estimates of revenue and costs. Certain factors can impact these estimates including, but not limited to, schedule delays, labor productivity, the complexity of work performed and the cost and availability of materials. Revisions to estimated cost to complete a project that result from inefficiencies in our performance that were not expected in the pricing of the contract are expensed in the period in which these inefficiencies become known. Contract modifications can change a contract’s scope, price, or both. Approved contract modifications are accounted for as either a separate contract or as part of the existing contract depending on the nature of the modification which is subject to management’s judgment.

Income Taxes: The Company and its U.S. subsidiaries file a consolidated federal income tax return. Deferred income taxes are provided for temporary differences between financial reporting and the consolidated tax return in accordance with the liability method. A valuation allowance is provided against net deferred tax assets when conditions indicate that it is more likely than not that the benefit related to such assets will not be realized. In the event that we change our determination as to the amount of deferred tax assets that can be realized, the valuation allowance will be adjusted with a corresponding impact to the provision for income taxes in the period in which such determination is made. Management must make assumptions, judgments and estimates to determine our deferred tax assets and liabilities, current provision for income taxes and valuation allowances. In making such assumptions we consider all available evidence including past operating results, estimates of future taxable income and the feasibility of tax planning strategies

Recent Accounting Standards

For disclosures regarding recent accounting standards, refer to Note 2, “Significant Accounting Policies,” of our consolidated financial statements included under Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

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Forward-Looking Statements

We are making this statement in order to satisfy the “safe harbor” provisions contained in the Private Securities Litigation Reform Act of 1995. This Annual Report includes “forward-looking statements.” These forward-looking statements include statements relating to our business, including statements regarding completed acquisitions and investments and related accretion or statements with respect to the use of proceeds or redeployment of capital from recent divestitures, as well statements regarding sales outlooks, revenues, cost and commercial synergies and efficiency savings, objectives, future orders, margins, segment sales mix, earnings or performance, liquidity and cash flow, repayment or settlement of maturing debt, inventory levels, capital expenditures, supply chain challenges, inflationary pressures including materials costs and pricing increases, business trends, clean energy market opportunities including addressable market and projected industry-wide investments, carbon and GHG emission targets, governmental initiatives, including changes in governmental policies, executive orders and other information that is not historical in nature. In some cases, forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “believes,” “projects,” “forecasts,” “outlook,” “guidance,” “target,” “continue” or the negative of such terms or comparable terminology. Forward-looking statements contained herein (including future cash contractual obligations, liquidity, debt repayment, cash flow, orders, results of operations, projected revenues, margins, capital expenditures, industry and business, trends, clean energy and other new market or expansion opportunities, cost and commercial synergies and savings objectives, and government initiatives among other matters) or in other statements made by us are made based on management’s expectations and beliefs concerning future events impacting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by forward-looking statements.

The risk factors discussed in Item 1A. “Risk Factors” and the factors discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” among others, could affect our future performance and liquidity and value of our securities and could cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us or on our behalf. These factors should not be construed as exhaustive and there may also be other risks that we are unable to predict at this time. All forward-looking statements included in this Annual Report are expressly qualified in their entirety by these cautionary statements.

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this Annual Report and are expressly qualified in their entirety by the cautionary statements included in this Annual Report. We undertake no obligation to update or revise forward-looking statements which may be made to reflect events or circumstances that arise after the filing date of this document or to reflect the occurrence of unanticipated events, except as otherwise required by law.

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our results of operations and financial condition should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements. Actual results may differ materially from those discussed below. See “Forward-Looking Statements” at the end of this discussion and Item 1A. “Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with this discussion.

Overview

We are a leading independent global leader in the design, engineering, and manufacturing of process technologies and equipment for gas and liquid molecule handling for the Nexus of Clean™ – clean power, clean water, clean food, and clean industrials, regardless of molecule. Our unique product and solution portfolio across stationary and rotating equipment is used in every phase of the liquid gas supply chain, including engineering, service and repair from installation to preventive maintenance and digital monitoring. Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas and carbon capture among other applications. We are committed to excellence in environmental, social and corporate governance (ESG) issues both for our company as well as our customers. With 64 global manufacturing locations and over 50 service centers from the United States to Asia, Australia, India, Europe and South America, we maintain accountability and transparency to our team members, suppliers, customers and communities.

Macroeconomic Impacts

The current conflict between Russia and Ukraine and the related sanctions imposed by countries against Russia, along with the heightened tensions between the United States and China and recent unrest in the Middle East continue to create uncertainty in the global economy. We are unable to predict the impact these actions will have on the global economy or on our business, financial condition and results of operations. These events did not have a material adverse effect on our reported results for the year ended December 31, 2023, however we will continue to actively monitor in terms of their potential impact on our results of operations beyond 2023.

Environmental, Social, Governance

Chart is proud to be at the forefront of the clean energy transition as a leading provider of technology, equipment and services related to liquefied natural gas (LNG), hydrogen, biogas, carbon capture and water treatment, among other applications. We also have a unique offering for the Nexus of Clean™ – clean power, clean water, clean food and clean industrials. This leadership position is possible not only because we have the broadest offering of clean innovative solutions for the various end markets we serve, but also because we are committed to global responsibility. Reporting our ESG performance is one of the ways we demonstrate accountability and transparency to our team members, suppliers, customers, shareholders and communities. Below are some highlights of our ESG efforts, and further information can be found in our fourth Annual Sustainability report with scorecard which was released in April 2023. Our fifth Annual Sustainability report with scorecard will be released in April 2024.

We measure our ESG and sustainability targets and progress against them.

•We measure progress through the Sustainability Accounting Standards Board (SASB) and Task Force on Climate Related Financial Disclosures (TCFD) indices, as well as contributing to the Global Reporting Initiative (GRI) and United Nations Sustainable Development Goals (SDGs). We contribute to 10 of the 17 United Nations Sustainable Development Goals (SDGs).

•Safety: total recordable incident rate (TRIR) of 0.52 as of January 31, 2024, our lowest in our history.

•Many of our safety programs and practices reflect requirements of the ISO 45001 Occupational Health and Safety standard for management systems. Chart voluntarily certifies certain manufacturing and fabrication facilities to this internationally recognized standard to increase safety and reduce workplace risks.

•We utilize iPoint and Riskmethods analytics to proactively monitor our supply chain for proper governance in our supplier network including their climate targets and other ESG activities.

•Chart remains committed to its ambitious climate targets of 50% emission intensity reduction by 2030 and net zero emissions by 2050 and are ahead of our 2030 target in terms of progress toward it. In addition to decreasing our emissions intensity in 2022, we also managed to reduce emissions 5.8% on an absolute basis. We made plant improvements including energy efficient upgrades for various equipment – including replacement of diesel powered equipment with electric and installation of LED lighting in office spaces. In addition, we plan to achieve our targets by switching energy from fossil fuel based to carbon free supply and installing on-site renewables where applicable, as

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well as continuing to participate in ongoing energy audits. At a local site level, we also continue to find ways to reduce both waste-to-landfill as well as mains water usage.

•We began tracking and reporting our global water consumption and waste recycled, an effort that speaks to our commitment to ESG transparency.

•We remain committed to our social targets:

◦Increase female representation to 40% on our management team by 2030.

◦Increase female representation to 35% in senior roles by 2030.

◦Achieve team member volunteer participation of 25% as part of our community program by 2030.

We provide our One Chart global team members with various programs and practices to support our ESG and employee-drive culture:

•We have a Global Sustainability Committee, Global Safety Council, and Global Diversity & Inclusion Committee, all comprised of team member volunteers and engagement from our global locations.

◦Our Global Sustainability Committee has five sub-committees focused on energy management, zero waste, electrification, renewable energy and water management. In 2023, this committee focused on sustainable global best practice and knowledge sharing between the Chart and Howden businesses.

•We have numerous employee resource groups (ERG), including:

◦Chart Network of Women (NOW) with a mission of empowering women both personally and professionally with local chapters globally across the United States, Europe, and Asia.

◦Chart Pride ERG supporting LGBTQIA+ team members.

◦In Q1 2024, there are planned launch dates for Chart Young Professionals and Veterans ERGs.

•Chart adopted Howden’s Bright Futures community volunteering program, which is now a facet of Chart’s Giving Back Program. Bright Futures is a program focused around giving back to the younger generation, with particular focus on promoting STEM.

•We have an employee relief fund for our own team members that need assistance.

•Our team members raised over $25,000 to support women in the Dress For Success campaign in March 2023. This is the third year in a row raising $25,000 for this cause.

•Our team members raised over $60,000 in 2023 through an internal STEPtember campaign, coordinated by our finance organization.

We are our helping customers to achieve their own sustainability targets in a number of different ways whether that’s through reducing the amount of plastic used in packaging to lowering greenhouse gas emissions by enabling the transition towards cleaner fuels.

•Howden’s installed base of products enables the avoidance of over 245 million tons of CO2 a year. This is equivalent to removing 52 million fossil-fueled cars from the road in the same period.

•A single gas-gas heater is estimated to avoid 64,000 tons of CO2 emissions from flue gas. Our current gas-gas heater installed base (doubled since 2022) saves approximately 32 million tons of CO2 per year.

•Our ChartWater team treats over 4.5 billion gallons of water a day in the United States and provides clean water to approximately a billion people worldwide daily.

•We helped to eliminate nearly 280 million of PET (plastic) used in water bottles in the United States. Our liquid nitrogen doser enables customers to produce 432,000,000 cans of water annually (instead of plastic bottles) which avoids production of 8.21 billion grams of plastic per year.

•In 2023, Chart products produced about 65 million tons of LNG to replace coal fired power generation (non-U.S.).

•In 2023, Chart products reduced over 800 million liters of diesel used by over-the-road trucks.

•Ventsim™ DESIGN is used by over 2,800 mines, universities, consultants, government, and research organizations in 70 countries. Ventsim™ CONTROL has been successfully installed on over 30 mine sites in 5 continents. For example, a mining customer is seeing a 56% reduction in underground ventilation electricity costs by utilizing Ventsim™ CONTROL for mine optimization.

Our governance supports our ESG focus

•We have an independent Board of Directors that is comprised of ten directors (four of our ten directors are female and four of our ten are diverse) and governed with a separate independent Chairwoman and CEO.

•We regularly hold reviews on ESG and cybersecurity with our Board of Directors.

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•We link our executives and their direct reports short-term incentive payout (25% of the strategic and operational goals) to a metric driven, percentage-reduction ESG metric, and have done this for three years (and continue to do in 2024).

•We offer every team member worldwide one paid day off each year to volunteer in our communities. In 2021, Chart started matching employee donations up to $250 per employee per year to charitable organizations.

In 2023, we received the following ESG-oriented recognition:

•S&P Global Platts Energy Awards Corporate Impact – Comprehensive Portfolio finalist (2023)

•Hydrogen Technology of the Year finalist in the 2023 Hydrogen Future Awards

•Named to Newsweek’s America’s Most Responsible Companies 2024 list, demonstrating our commitment to corporate social responsibility, sustainability, and giving back to our communities.

2023 Highlights

On March 17, 2023, we completed the acquisition of Howden (the “Howden Acquisition”), a leading global provider of mission critical air and gas handling products and services, from affiliates of KPS Capital Partners, LP. Results of operations include results of Howden from the date of acquisition and exclude Roots™ (“Roots”) business financial results for our entire ownership period of March 17, 2023 through the divestiture date, August 18, 2023. Record order activity, mainly driven by the impact of the Howden Acquisition, contributed to record ending total backlog of $4,278.8 million as of December 31, 2023 compared to $2,338.1 million as of December 31, 2022, representing an increase of $1,940.7 million or 83.0%, which reflects the broad-based demand we continue to see year-over-year across our product categories. The increase in backlog was largely driven by record orders for the year ended December 31, 2023 of $4,140.2 million compared to $2,779.9 million for the year ended December 31, 2022 representing an increase of $1,360.3 million or 48.9%. Record order intake in our Repair, Service & Leasing segment of $1,100.8 million in 2023 compared to $218.9 million in 2022, was mainly driven by the inclusion of the Howden aftermarket business and LNG retrofit. Record orders in our Specialty Products segment for 2023 of $1,341.6 million compared to $665.5 million for 2022 were mainly driven by strong order intake for hydrogen and helium, space exploration, water treatment, carbon capture and other specialty applications. Heat Transfer Systems segment backlog totaled a record $1,716.5 million as of December 31, 2023 compared to $1,300.1 million as of December 31, 2022. Specialty Products segment backlog totaled a record $1,631.1 million as of December 31, 2023, compared to $645.9 million as of December 31, 2022. Cryo Tank Solutions segment backlog totaled $361.9 million as of December 31, 2023, compared to $371.0 million as of December 31, 2022.

Consolidated sales increased to a record $3,352.5 million in 2023 from $1,612.4 million in 2022, representing an increase of $1,740.1 million or 107.9%. The consolidated sales increase was bolstered by sales from the Howden Acquisition. This increase was mainly driven by growth in our Repair, Service & Leasing segment, increased sales in our Heat Transfer Systems segment on favorable sales in process systems related to big and small-scale LNG liquefaction and floating LNG, gains within our Cryo Tank Solutions segment on favorable sales in general industrials and within our Specialty Products segment on favorable sales in energy recovery, water treatment, space applications, metals, mining and carbon capture. Consolidated gross profit in 2023 increased by $633.0 million from $407.4 million to a record $1,040.4 million or 155.4% compared to 2022. Gross profit margin of 31.0% in 2023 increased from 25.3% in 2022. The increase in gross profit and gross profit margin for 2023 compared to 2022 was mainly driven by product mix and also demonstrates our progress in improvement in our margin profile as we continued to take further pricing and cost reduction actions.

Consolidated SG&A expenses as a percentage of consolidated sales for 2023 increased by 1.2% as compared to 2022 primarily due to integration related costs incurred in 2023.

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Operating Results

The following table sets forth the percentage relationship that each line item in our consolidated statements of income represents to sales for the years ended December 31, 2023, 2022, and 2021:

_______________

(1)Cost of sales includes restructuring costs/(credits) of $0.5, $(1.0) and $2.6 for the years ended December 31, 2023, 2022 and 2021, respectively.

(2)Selling, general and administrative expenses include restructuring costs of $13.0, $0.0 and $0.9 for the years ended December 31, 2023, 2022 and 2021, respectively.

(3)Includes deal-related and integration costs of $38.5 and $17.6 for the years ended December 31, 2023 and 2022.

(4)Includes share-based compensation expense of $12.6, $10.6 and $11.2, representing 0.4%, 0.7% and 0.8% of sales, for the years ended December 31, 2023, 2022 and 2021, respectively.

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Consolidated Results for the Years Ended December 31, 2023, 2022 and 2021

The following table includes key metrics used to evaluate our business and measure our performance and represents selected financial data for our operating segments for the years ended December 31, 2023, 2022 and 2021 (dollar amounts in millions). Further detailed information regarding our operating segments is presented in Note 4, “Segment and Geographic Information,” of the consolidated financial statements included under Item 15 “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

Selected Segment Financial Information

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_______________

(1)Restructuring charges/(credits) for the years ended:

•December 31, 2023 were $13.5 ($5.2 - Corporate, $4.0 - Repair, Service & Leasing, $1.8 – Specialty Products, $1.6 – Cryo Tank Solutions and $0.9 – Heat Transfer Systems);

•December 31, 2022 were $(1.0) ($(1.4) – Repair, Service & Leasing, $0.3 – Heat Transfer Systems and $0.1 – Cryo Tank Solutions); and

•December 31, 2021 were $3.5 ($1.7 – Heat Transfer Systems, $1.5 – Repair, Service & Leasing, $0.3 – Cryo Tank Solutions).

(2)Includes deal-related and integration costs of $38.5 and $17.6 for the years ended December 31, 2023 and 2022, respectively.

Results of Operations for the Years Ended December 31, 2023 and 2022

Sales in 2023 increased by $1,740.1 million from $1,612.4 million to a record $3,352.5 million, or 107.9%. This increase was mainly driven by the sales contribution from the Howden Acquisition, including growth in our Repair, Service & Leasing segment, increased sales in our Heat Transfer Systems segment on favorable sales in process systems related to big and small-scale LNG liquefaction and floating LNG, gains within our Cryo Tank Solutions segment on favorable sales in general industrials and within our Specialty Products segment on favorable sales in energy recovery, water treatment, space applications, metals, mining and carbon capture.

Gross profit in 2023 increased by $633.0 million from $407.4 million to $1,040.4 million or 155.4% compared to 2022. The increase in gross profit was primarily driven by the contribution from the Howden Acquisition. Gross profit margin of 31.0% in 2023 increased from 25.3% in 2022. The increase in gross profit margin for 2023 compared to 2022 was primarily driven by our ongoing cost out actions, productivity, early synergy achievement and pricing actions. Restructuring costs/(credits) recorded to cost of sales were $0.5 million and $(1.0) million for the years ended December 31, 2023 and 2022, respectively.

Consolidated SG&A expenses increased by $271.8 million or 126.7% during 2023 compared to the same period in 2022 primarily driven by the inclusion of Howden SG&A expenses, including higher employee-related costs, while consolidated SG&A expenses as a percentage of consolidated sales for 2023 increased by 1.2% as compared to 2022 primarily due to activities related to the integration of the Howden Acquisition.

Acquisition Related Finance Fees

Acquisition related finance fees for the year ended December 31, 2023 were $26.1 million related to bridge loan financing for our acquisition of Howden. Acquisition related finance fees for the year ended December 31, 2022 were $37.0 million related to financing for the acquisition of Howden.

Interest Expense, Net and Financing Costs Amortization

Interest expense, net for the year ended December 31, 2023 and 2022 was $271.9 million and $28.8 million, respectively. The increase in interest expense, net, is primarily due to higher borrowings outstanding, specifically our senior secured notes due 2030 and senior unsecured notes due 2031, both issued on December 22, 2022 with interest payable semi-annually on January 1 and July 1 of each year, commencing July 1, 2023, as well as borrowings related to our term loan, drawn on March 17, 2023 for the Howden Acquisition and an additional incremental term loan drawn on June 30, 2023, compared to borrowings outstanding during the same period in 2022. The increase in interest expense, net was also driven by higher average interest rates during the year ended December 31, 2023. The increase in interest expense, net was partially offset by interest income of $21.5 million earned primarily from deposits of proceeds from the senior secured notes due 2030, senior unsecured notes due 2031, common stock and preferred stock offerings held until the consummation of the Howden Acquisition, interest income on sales-type leases of $3.3 million, and $1.6 million interest income from our cross-currency swaps entered into on September 16, 2022. Interest expense, net for the year ended December 31, 2023 and 2022 included $147.2 million and $23.4 million, respectively, in interest related to borrowings on our current senior secured revolving credit facility due 2026 and previous

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senior secured revolving credit facility and term loan due 2030. Interest expense, net for the year ended December 31, 2023 related to borrowings on our senior secured notes due 2030 and senior unsecured notes due 2031 was $109.7 million and $48.6 million, respectively. Interest expense, net for the year ended December 31, 2022 related to borrowings on our senior secured notes due 2030 and senior unsecured notes due 2031 was $3.0 million and $1.3 million, respectively. Interest expense, net for the year ended December 31, 2023 included $2.4 million of 1.0% cash interest expense related to our convertible notes due November 2024. Interest expense, net for the year ended December 31, 2022 included $4.0 million of 1.0% cash interest expense related to our convertible notes due November 2024.

For 2023 and 2022, financing costs amortization was $17.2 million and $2.9 million, respectively. The increase of $14.3 million was primarily due to the amendment of our senior secured revolving credit facility due 2026, the issuance of senior secured notes due 2030 and senior unsecured notes due 2031 during the fourth quarter of 2022 as well as the issuance of incremental term loans on March 17, 2023 and June 30, 2023, all of which increased deferred debt issuance costs.

Loss on Extinguishment of Debt

As a result of the events of both the October 2, 2023 Credit Agreement amendment and the December 4, 2023 partial prepayment of the term loans due March 2030, we recognized a loss on extinguishment of debt of $7.8 million for the year ended December 31, 2023. For further information, refer to Note 10, “Debt and Credit Arrangements” of this Annual Report on Form 10-K.

Unrealized Loss (Gain) On Investments In Equity Securities

During 2023, we recognized an unrealized loss on investments in equity securities of $14.4 million, which was driven by an unrealized loss of $12.7 million on the mark-to-market adjustment of our investment in McPhy (Euronext Paris: MCPHY – ISIN; FR0011742329) (“McPhy”) and a $1.7 million unrealized loss on the mark-to-market adjustment of our investment in Stabilis Energy, Inc. (NasdaqCM: SLNG) (“Stabilis”). During 2022, we recognized an unrealized gain on investments in equity securities of $13.1 million, which was driven by an unrealized gain of $23.3 million upon remeasurement of the Svante investment due to an observable price change in an orderly transaction for similar instruments of the same issuer and a $1.6 million unrealized gain on the mark-to-market adjustment of our investment in Stabilis, partially offset by a $11.8 million unrealized loss on the mark-to-market adjustment of our investment in McPhy.

Foreign Currency (Gain) Loss

For the year ended December 31, 2023, foreign currency gain was $4.1 million, and for the year ended December 31, 2022 foreign currency gain was $0.8 million. The variance between periods was primarily driven by fluctuations in the U.S. dollar as compared to the euro and British pound.

Income Tax Expense

Income tax expense of $3.0 million and $15.9 million for the years ended December 31, 2023 and 2022, respectively, represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of 5.2% and 16.1%, respectively. The effective income tax rate of 5.2% for the year ended December 31, 2023 differed from the U.S. federal statutory rate of 21% due primarily to tax benefits associated with the Howden integration, release of previously booked valuation allowances, research and development credits and share-based compensation offset by the effect of income earned by certain of our foreign entities being taxed at higher rates than the federal statutory rate.

The effective income tax rate of 16.1% for the year ended December 31, 2022 differed from the U.S. federal statutory rate of 21% primarily due to tax benefits associated with share-based compensation and the release of previously booked valuation allowances offset by the effect of income earned by certain of our foreign entities being taxed at higher rates than the federal statutory rate as well as increases in our state taxes due to expansion in new jurisdictions.

Net Income Attributable to Chart Industries, Inc. From Continuing Operations

As a result of the foregoing, net income attributable to Chart Industries, Inc. from continuing operations was $47.9 million and $81.6 million for 2023 and 2022, respectively.

Discontinued Operations

The financial results of the Roots business are reflected in our consolidated financial statements as discontinued operations for the years ended December 31, 2023. For further information, refer to Note 3, “Discontinued Operations and Other Businesses Sold” of our consolidated financial statements included under Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

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Results of Operations for the Years Ended December 31, 2022 and 2021

Sales in 2022 increased by $294.7 million from $1,317.7 million to $1,612.4 million, or 22.4%. This increase was primarily driven by growth in our Heat Transfer Systems segment on favorable sales in process systems related to big and small-scale LNG liquefaction and floating LNG, as well as gains within our Cryo Tank Solutions segment on favorable sales in storage equipment and mobile equipment, within our Repair, Service & Leasing segment on favorable sales in parts, repairs, and services, aftermarket fans, aftermarket air cooled heat exchangers and in our lifecycle business and within our Specialty Products segment on favorable sales in hydrogen and helium applications, water treatment, space applications, food & beverage applications and carbon capture.

Gross profit in 2022 increased by $83.2 million from $324.2 million to $407.4 million or 25.7% compared to 2021. Gross profit margin of 25.3% in 2022 increased from 24.6% in 2021. The increase in gross profit margin for 2022 compared to 2021 was primarily driven by product mix and pricing and cost reduction actions we took for all segments overall. Restructuring (credits)/costs recorded to cost of sales were $(1.0) million and $2.6 million for the years ended December 31, 2022 and 2021, respectively.

Consolidated SG&A expenses increased by $17.7 million, or 9.0% during 2022, compared to the same period in 2021 primarily driven by higher employee-related costs while consolidated SG&A expenses as a percentage of consolidated sales for 2022 decreased by 1.6% as compared to 2021 primarily due to the effect of cost reduction actions we took in 2022.

Acquisition Related Finance Fees

Acquisition related finance fees for the year ended December 31, 2022 were $37.0 million related to financing for the acquisition of Howden. There were no acquisition related finance fees for the year ended December 31, 2021.

Interest Expense, Net and Financing Costs Amortization

Interest expense, net for the year ended December 31, 2022 and 2021 was $28.8 million and $10.7 million, respectively. The increase in interest expense, net, is primarily due to higher borrowings outstanding and higher average interest rates during 2022 on our senior secured revolving credit facility due October 2026, as compared to borrowings outstanding and average interest rates on our previous senior secured revolving credit facility and term loan due June 2024 during 2021 as well as borrowings related to our senior secured notes due 2030 and senior unsecured notes due 2031, which were issued on December 22, 2022. The increase was partially offset by interest income of $1.3 million from our cross-currency swaps entered into during 2022. Interest expense, net for the year ended December 31, 2022 included $4.0 million of 1.5% cash interest expense related to our convertible notes due November 2024. Interest expense, net for the year ended December 31, 2021 included $2.6 million of 1.0% cash interest expense related to our convertible notes due November 2024. Interest expense, net for the year ended December 31, 2022 and 2021 included $23.4 million and $9.0 million, respectively, in interest related to borrowings on our current senior secured revolving credit facility due 2026 and previous senior secured revolving credit facility and term loan due 2024. Interest expense, net for the year ended December 31, 2022 related to borrowings on our senior secured notes due 2030 and senior unsecured notes due 2031 was $3.0 million and $1.3 million, respectively.

For 2022 and 2021, financing costs amortization was $2.9 million and $8.3 million, respectively. The decrease of $5.4 million was primarily due to the amendment of our credit facilities during the fourth quarter of 2021 and the related write off of the unamortized deferred debt issuance costs associated with the senior secured revolving credit facility due June 2024 and the term loan due June 2024, respectively. In conjunction with the amendment of our credit facilities in the fourth quarter of 2021, we recorded charges to net income of $3.8 million of the unamortized deferred debt issuance costs associated with the senior secured revolving credit facility due 2024 and the term loan due June 2024 as well as $0.3 million in new debt issuance costs resulting in a total one-time charge to net income of $4.1 million.

Unrealized Gain On Investments In Equity Securities

During 2022, we recognized an unrealized gain on investments in equity securities of $13.1 million, which was driven by an unrealized gain of $23.3 million upon remeasurement of the Svante investment due to an observable price change in an orderly transaction for similar instruments of the same issuer and a $1.6 million unrealized gain on the mark-to-market adjustment of our investment in Stabilis, partially offset by a $11.8 million unrealized loss on the mark-to-market adjustment of our investment in McPhy. During 2021, we recognized an unrealized gain of $3.2 million, which was driven by an unrealized gain of $20.7 million upon remeasurement of the initial HTEC investment due to an observable orderly transaction for similar instruments of the same issuer and a $2.2 million unrealized gain on the mark-to-mark adjustment of our investment in Stabilis, partially offset by a $19.7 million unrealized loss on the mark-to-market adjustment of our investment in McPhy.

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Realized Gain on Investment In Equity Securities

On December 14, 2021 we completed the acquisition of the remaining 85% of the shares of Earthly Labs. On the acquisition date, we recognized a gain of $2.6 on the remeasurement of our initial 15% investment, which was recorded as realized gain on investment in equity securities in the consolidated statement of income for the year ended December 31, 2021.

Foreign Currency (Gain) Loss

For the year ended December 31, 2022, foreign currency gain was $0.8 million, and for the year ended December 31, 2021 foreign currency loss was $0.9 million. The variance between the periods was primarily driven by fluctuations in the U.S. dollar as compared to the euro and Chinese yuan.

Income Tax Expense

Income tax expense of $15.9 million and $13.5 million for the years ended December 31, 2022 and 2021, respectively, represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of 16.1% and 18.2%, respectively. The effective income tax rate of 16.1% for the year ended December 31, 2022 differed from the U.S. federal statutory rate of 21% primarily due to tax benefits associated with share-based compensation and the release of previously booked valuation allowances offset by the effect of income earned by certain of our foreign entities being taxed at higher rates than the federal statutory rate as well as increases in our state taxes due to expansion into new jurisdictions.

The effective income tax rate of 18.2% for the year ended December 31, 2021 differed from the U.S. federal statutory rate of 21% primarily due to tax benefits associated with share-based compensation and the Alabama Trailers bargain purchase gain offset by the effect of income earned by certain of our foreign entities being taxed at higher rates than the federal statutory rate as well as losses incurred by certain of our Chinese operations for which no benefit was recorded.

Net Income Attributable to Chart Industries, Inc. From Continuing Operations

As a result of the foregoing, net income attributable to Chart Industries, Inc. from continuing operations was $81.6 million and $59.1 million for 2022 and 2021, respectively.

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Segment Results for the Years Ended December 31, 2023, 2022 and 2021

Our reportable and operating segments include: Cryo Tank Solutions, Heat Transfer Systems, Specialty Products and Repair, Service & Leasing. Corporate includes operating expenses for executive management, accounting, tax, treasury, corporate development, human resources, information technology, investor relations, legal, internal audit, and risk management. Corporate support functions are not currently allocated to the segments. For further information, refer to Note 4, “Segment and Geographic Information” of our consolidated financial statements included under Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K. The following tables include key metrics used to evaluate our business and measure our performance and represents selected financial data for our operating segments for the years ended December 31, 2023, 2022 and 2021 (dollar amounts in millions):

Cryo Tank Solutions—Results of Operations for the Years Ended December 31, 2023 and 2022

Cryo Tank Solutions segment sales increased by $136.5 million during 2023 as compared to 2022 to $640.8 million. As mentioned in the results of operations above, this increase was mainly driven by favorable sales in general industrials. The increase in the sales was also partially driven by the impact of the Howden Acquisition.

Cryo Tank Solutions segment gross profit increased by $33.3 million during 2023 as compared to 2022 primarily due to higher volume, while gross profit margin increased 100 basis points compared to 2022 due to improved cost conditions in 2023. The increase in gross profit was also partially driven by the impact of the Howden Acquisition.

Cryo Tank Solutions SG&A expenses increased during 2023 as compared to 2022 while SG&A expenses as a percentage of sales increased by 280 basis points. The increase in SG&A expenses was mainly due to employee and integration related costs driven by the Howden Acquisition.

Cryo Tank Solutions—Results of Operations for the Years Ended December 31, 2022 and 2021

Cryo Tank Solutions segment sales increased by $56.9 million during 2022 as compared to 2021. This increase was mainly driven by favorable sales in storage equipment in the United States and Europe and mobile equipment in the United States.

Cryo Tank Solutions segment gross profit increased by $5.2 million during 2022 as compared to 2021, and gross profit margin decreased by 130 basis points. The decrease in gross profit and gross profit margin was mainly driven by higher material prices and higher labor costs due to macroeconomic conditions.

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Cryo Tank Solutions segment SG&A expenses increased by $3.7 million during 2022 as compared to 2021. Furthermore, Cryo Tank Solutions segment SG&A expenses as a percentage of Cryo Tank Solutions segment sales decreased by 20 basis points in 2022 as compared to 2021. The increase in SG&A expenses was mainly due to higher employee-related costs.

Heat Transfer Systems—Results of Operations for the Years Ended December 31, 2023 and 2022

Heat Transfer Systems segment sales increased by $428.5 million during 2023 as compared to 2022 to a record $891.2 million. The increase was primarily driven by LNG products that utilized brazed aluminum heat exchangers and air coolers and systems servicing big LNG, floating LNG and small scale LNG applications as well as traditional energy applications.

Heat Transfer Systems segment gross profit increased by $156.2 million during 2023 as compared to 2022, and gross profit margin increased by 810 basis points. The increase in Heat Transfer Systems segment gross profit was primarily due to volume, and the increase in the related margin was mainly due to overall product and project volume mix.

Heat Transfer Systems segment SG&A expenses increased by $30.1 million during 2023 as compared to 2022, and SG&A expenses as a percentage of sales increased by 90 basis points. The increase in SG&A expenses was mainly due to higher employee and integration related costs driven by the Howden Acquisition.

Heat Transfer Systems—Results of Operations for the Years Ended December 31, 2022 and 2021

Heat Transfer Systems segment sales increased by $200.0 million during 2022 as compared to 2021. The increase was primarily driven by sales in small-scale, floating LNG and big LNG.

Heat Transfer Systems segment gross profit increased by $55.0 million during 2022 compared to 2021, and gross profit margin increased by 600 basis points driven by lower volume, partially offset by lower restructuring costs. The increase in Heat Transfer Systems segment gross profit was primarily due to overall product and project volume mix.

Heat Transfer Systems segment SG&A expenses decreased by $4.1 million during 2022 as compared to 2021 mainly due to lower restructuring costs and lower employee-related costs.

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Specialty Products—Results of Operations for the Years Ended December 31, 2023 and 2022

Specialty Products segment sales increased by $371.6 million during 2023 as compared to 2022 to a record $819.9 million. The increase in Specialty Products sales was primarily driven by the inclusion of the acquired Howden business in the current year, including favorable sales in energy recovery, marine, metals, space, water treatment and carbon capture.

Specialty Products segment gross profit increased by $82.8 million during 2023 as compared to 2022 largely due to the Howden Acquisition and volume, while gross profit margin decreased by 390 basis points largely due to product and project volume mix.

Specialty Products segment SG&A expenses increased by $27.0 million during 2023 as compared to 2022 primarily driven by inclusion of the Howden business, along with employee and integration related costs driven by the Howden Acquisition.

Specialty Products—Results of Operations for the Years Ended December 31, 2022 and 2021

Specialty Products segment sales increased by $15.4 million during 2022 as compared to 2021 to $448.3 million. Similar to the comments previously mentioned in the results of operations section, the increase in Specialty Products sales was primarily driven by favorable sales in hydrogen and helium applications, water treatment, space applications, food & beverage applications and carbon capture. The sales increase was almost fully offset by a 79.2% decline in HLNG vehicle tank sales driven by higher natural gas prices and our customers’ availability of semiconductors due to macroeconomic conditions.

Specialty Products segment gross profit decreased by $6.9 million during 2022 as compared to 2021, and gross profit margin decreased by 270 basis points largely due to stronger HLNG vehicle tank sales in 2021 as compared to 2022. The decrease in gross profit margin was mainly driven by overall product and project volume mix.

Specialty Products segment SG&A expenses increased by $12.3 million during 2022 as compared to 2021 primarily driven by ramp up in the business and acquisition additions.

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Repair, Service & Leasing—Results of Operations for the Years Ended December 31, 2023 and 2022

Repair, Service & Leasing segment sales increased by $819.6 million during 2023 as compared to 2022 to a record $1,029.2 million. The increase in the sales was largely attributed to the Howden Acquisition.

Repair, Service & Leasing segment gross profit increased by $360.7 million during 2023 as compared to 2022 to a record $440.2 million, and gross profit margin increased by 490 basis points to 42.8%. The increase in gross profit and the related margin was driven by volumes from the Howden Acquisition and early synergies achieved.

Repair, Service & Leasing segment SG&A expenses increased by $100.9 million during 2023 as compared to 2022. SG&A expenses as a percentage of sales increased by 400 basis points. The increase in SG&A expenses was largely attributed to inclusion of the Howden Acquisition in the current year and restructuring associated with the acquisition integration.

Repair, Service & Leasing—Results of Operations for the Years Ended December 31, 2022 and 2021

Repair, Service & Leasing segment sales increased by $22.6 million during 2022 as compared to 2021. Similar to the comments previously mentioned in the results of operations section, the increase was mainly driven by favorable sales in parts, repairs, and services, aftermarket fans, aftermarket air cooled heat exchangers and in our lifecycle business.

Repair, Service & Leasing segment gross profit increased by $29.9 million during 2022 as compared to 2021, and gross profit margin increased by 1,140 basis points. The increase in gross profit and the related margin was driven by more high margin, short-lead time replacement equipment sales during 2022 as compared to 2021. Furthermore, during 2021 we incurred unfavorable material costs relative to our leasing business which we did not incur during 2022.

Repair, Service & Leasing segment SG&A expenses decreased by $2.6 million during 2022 as compared to 2021. SG&A expenses as a percentage of sales decreased by 220 basis points as a result of large aftermarket sales without incremental SG&A.

Corporate

Corporate SG&A expenses increased by $84.7 million during 2023 as compared to 2022 mainly due to higher professional fees and employee-related costs. Corporate SG&A expenses increased by $8.4 million during 2022 as compared to 2021 mainly due to higher employee-related costs.

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Orders and Backlog

We consider orders to be those for which we have received a firm signed purchase order or other written contractual commitment from the customer. Backlog is comprised of the portion of firm signed purchase orders or other written contractual commitments from customers for which work has not been performed, or is partially completed, that we have not recognized as revenue and excludes unexercised contract options and potential orders. Our backlog as of December 31, 2023, 2022 and 2021 was $4,278.8 million, $2,338.1 million and $1,190.1 million, respectively.

The tables below represent orders received and backlog by segment for the periods indicated (dollar amounts in millions):

Orders and Backlog for the Year Ended and As of December 31, 2023 Compared to the Year Ended and As of December 31, 2022

Cryo Tank Solutions segment orders for 2023 were $608.8 million, as compared to $508.4 million for 2022, an increase of $100.4 million. This increase was driven by higher orders in general industrials offset by decreases in mobile and storage equipment. Cryo Tank Solutions segment backlog totaled $361.9 million as of December 31, 2023, compared to $371.0 million as of December 31, 2022, a decrease of $9.1 million.

Heat Transfer Systems segment orders for 2023 were $1,114.2 million compared to $1,417.6 million for 2022, a decrease of $303.4 million mainly driven by lower orders for brazed aluminum heat exchangers, air exchangers and across systems. Heat Transfer Systems segment backlog totaled a record $1,716.5 million as of December 31, 2023 compared to $1,300.1 million as of December 31, 2022, an increase of $416.4 million.

Specialty Products segment orders for 2023 were $1,341.6 million compared to $665.5 million for 2022, an increase of $676.1 million. The increase in Specialty Products was mainly driven by strong order intake for hydrogen and helium liquefaction, space, water treatment, carbon capture and other specialty applications. Specialty Products segment backlog totaled a record $1,631.1 million as of December 31, 2023, compared to $645.9 million as of December 31, 2022, an increase of $985.2 million.

Repair, Service & Leasing segment orders for 2023 were $1,100.8 million compared to $218.9 million in 2022, an increase of $881.9 million. The increase was primarily driven by the Howden Acquisition. Repair, Service & Leasing segment backlog totaled $587.9 million as of December 31, 2023, compared to $57.0 million as of December 31, 2022, an increase of $530.9 million.

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Orders and Backlog for the Year Ended and As of December 31, 2022 Compared to the Year Ended and As of December 31, 2021

Cryo Tank Solutions segment orders for 2022 were $508.4 million, as compared to $555.4 million for 2021, a decrease of $47.0 million. This decrease was driven by lower order intake for mobile equipment and storage equipment due to timing shifts of customer orders. Cryo Tank Solutions segment backlog totaled $371.0 million as of December 31, 2022, compared to $346.8 million as of December 31, 2021, an increase of $24.2 million.

Heat Transfer Systems segment orders for 2022 were $1,417.6 million compared to $312.0 million for 2021, an increase of $1,105.6 million mainly driven by higher order intake for LNG including big and small-scale LNG, as well as floating LNG. Heat Transfer Systems segment backlog totaled $1,300.1 million as of December 31, 2022 compared to $370.4 million as of December 31, 2021, an increase of $929.7 million.

Specialty Products segment orders for 2022 were $665.5 million compared to $648.6 million for 2021, an increase of $16.9 million. Comparatively, during 2022 we recorded hydrogen and helium orders of $300.1 million that included four liquefaction orders totaling $194.4 million whereas during 2021 we recorded hydrogen and helium orders of $282.1 million that included four liquefaction orders totaling approximately $150.0 million. The increase in orders was also attributed to an increase in space, water treatment, carbon capture and other specialty applications partially offset by lower order intake for HLNG vehicle tanks driven by higher natural gas prices and our customers’ availability of semiconductors due to macroeconomic conditions. Specialty Products segment backlog totaled $645.9 million as of December 31, 2022, compared to $438.2 million as of December 31, 2021, an increase of $207.7 million.

Repair, Service & Leasing segment orders for 2022 were $218.9 million compared to $180.6 million for 2021, an increase of $38.3 million. This increase was primarily driven by higher order intake within lifecycle services, aftermarket fans and our leasing business. Repair, Service & Leasing segment backlog totaled $57.0 million as of December 31, 2022, compared to $56.5 million as of December 31, 2021, an increase of $0.5 million.

Liquidity and Capital Resources

In connection with the funding of the Howden Acquisition, we borrowed incremental term loans in March 2023 and entered into a revised and expanded senior secured revolving credit facility and issued senior secured notes due 2030 and senior unsecured notes due 2031 during the fourth quarter of 2022. A description of these and our other debt instruments and related covenants are described in Note 10, “Debt and Credit Arrangements,” of our consolidated financial statements included under Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

Sources and Uses of Cash

Our cash and cash equivalents totaled $201.1 million, which includes $12.8 million of restricted cash as of December 31, 2023, a decrease of $2,404.2 from the balance at December 31, 2022, which included borrowings in connection with the Howden Acquisition. Our foreign subsidiaries held cash of approximately $170.1 million and $66.7 million at December 31, 2023 and 2022, respectively, to meet their liquidity needs. No material restrictions exist to accessing cash held by our foreign subsidiaries. Cash equivalents are primarily invested in money market funds that invest in high quality, short-term instruments, such as U.S. government obligations, certificates of deposit, repurchase obligations, and commercial paper issued by corporations that have been highly rated by at least one nationally recognized rating organization, and in the case of cash equivalents in China, obligations of local banks. We believe that our existing cash and cash equivalents, funds available under our senior secured revolving credit facility due October 2026 or other financing alternatives, and cash provided by operations will be sufficient to meet our normal working capital needs, capital expenditures and investments for the foreseeable future.

Years Ended December 31, 2023 and 2022

Cash provided by operating activities during 2023 was $167.2 million, an increase of $86.4 million from 2022, primarily due to an increase in cash generated by operations, partially offset by higher interest payments as a result of the debt raised in connection with the Howden Acquisition and the settlement of claims related to the Pacific Fertility Clinic lawsuits in the amount of $73.0 million as discussed in Item 3. Legal Proceedings.

Cash used in investing activities during 2023 was $3,990.1 million, as compared to cash used in investing activities of $101.6 million during 2022. During 2023 we used $4,322.3 million of cash for the acquisition of Howden, $135.6 million for capital expenditures, and $11.6 million for investments, primarily Avina and Hylium Industries. In 2023 we also received proceeds, net of cash divested, of $474.8 million from the sale of our Roots, Cofimco, American Fan, and Cryo Diffusion businesses. See below for discussion regarding the composition of cash provided by investing activities during 2022.

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Cash provided by financing activities during 2023 was $1,412.5 million compared to cash provided by financing activities of $2,504.2 million during 2022. In connection with the Howden Acquisition, we borrowed incremental term loans in the aggregate principal amount of $1,534.8 million and borrowed incremental term loans in the aggregate principal amount of $250.0 million for general corporate purposes during 2023. On December 4, 2023, we voluntarily prepaid a portion of our term loans due March 2030 in the amount of $150.0 million. During 2023, we borrowed $1,895.1 million from revolving credit facilities and raised $11.7 million in proceeds for the issuance of common stock, primarily to fund the Howden Acquisition and repaid $1,901.2 million in borrowings on credit facilities. A portion of debt repayments was funded with the proceeds from the previously mentioned divestitures. During 2023 we paid $136.2 million in debt issuance costs and paid $27.3 million of dividends on our mandatory convertible preferred stock. We also paid $12.2 million in dividend distributions to noncontrolling interest owners during 2023. See below for discussion regarding the composition of cash provided by financing activities during 2022.

Years Ended December 31, 2022 and 2021

Cash provided by operating activities during 2022 was $80.8 million, an increase of $102.1 million from 2021, primarily due to an increase in operating cash provided by working capital, particularly within accounts payable and inventory.

Cash used in investing activities during 2022 was $101.6 million, as compared to cash used in investing activities of $361.2 million during 2021. During 2022, we paid $74.2 million for capital expenditures. We also used $25.8 million of cash for the acquisitions of Fronti Fabrications, Inc., CSC Cryogenic Service Center AB, 100% of a joint venture in AdEdge India and a final net working capital adjustment related to our 2021 acquisition of AdEdge. We used $9.9 million for investments in Hy24, Gold Hydrogen LLC and Avina Clean Hydrogen Inc., partially offset by $9.4 million cash received from settlements of our cross-currency swaps.

Cash provided by financing activities during 2022 was $2,504.2 million compared to cash provided by financing activities of $381.9 million during 2021. During 2022, we borrowed $2,575.3 million on credit facilities, primarily related to senior secured notes due 2030, senior unsecured notes due 2031 and our senior secured revolving credit facility and repaid $1,128.2 million in borrowings on credit facilities using proceeds from equity offerings related to the Howden Acquisition to pay down a portion of our senior secured revolving credit facility. Also during 2022, we received $675.1 million net proceeds from the issuance of common stock and $388.1 million net proceeds from the issuance of preferred stock, both related to the Howden Acquisition.

Cash Requirements

We do not currently anticipate any unusual cash requirements for working capital needs for the year ending December 31, 2024 relating to our existing business. Management anticipates we will be able to satisfy cash requirements for our ongoing business for the foreseeable future with cash generated by operations, existing cash balances and available borrowings under our credit facilities. We expect capital expenditures for 2024 to be in the range of $115.0 million to $125.0 million.

Contractual Obligations

Our material cash requirements from known contractual obligations include those related to debt and leases, refer to Note 10, “Debt and Credit Arrangements” and Note 20, “Leases”, respectively, within Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K for payments due by period. We also have contractual coupon interest related to our 1.00% convertible notes due November 2024, 7.500% senior secured notes due 2030 and 9.500% senior unsecured notes due 2031, which, as of December 31, 2023 totals $160.5 million for the next twelve months and $917.2 million thereafter. Purchase obligations arising from purchases of inventory and services are entered into with vendors in the normal course of business and are within our expected requirements for resource planning. We occasionally enter into firm purchase commitments to procure raw materials such as stainless steel, carbon steel and aluminum. As of December 31, 2023, firm purchase commitments were not material.

We also have a 44.1 million euros investment commitment for the Clean H2 Infra Fund as mentioned in Note 6, “Investments” within Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K. Funding is required when the fund manager issues a capital call, which shall not exceed 30% of our capital commitment in any rolling 12-month period. We also have contingent consideration arrangements from prior acquisitions with a potential payout range of $0.0 million to $12.5 million. Refer to Note 14, “Business Combinations” within Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K for further information.

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Our commercial commitments as of December 31, 2023, which include standby letters of credit and bank guarantees, represent potential cash requirements resulting from contingent events that require performance by us or our subsidiaries pursuant to funding commitments, and are as follows (dollar amounts in millions):

Contingencies

We are subject to federal, state, local, and foreign environmental laws and regulations concerning, among other matters, waste water effluents, air emissions, and handling and disposal of hazardous materials, such as cleaning fluids. We are involved with environmental compliance, investigation, monitoring, and remediation activities at certain of our owned and formerly owned manufacturing facilities and at one owned facility that is leased to a third party, and, except for these continuing remediation efforts, believe we are currently in substantial compliance with all known environmental regulations. Management believes that any additional liability in excess of amounts accrued, which may result from the resolution of such matters, should not have a material adverse effect on our financial position, liquidity, cash flows or results of operations.

We are occasionally subject to various legal claims related to performance under contracts, product liability, taxes, employment matters, environmental matters, intellectual property, and other matters, several of which claims assert substantial damages, in the ordinary course of our business. Based on our historical experience in litigating these claims, as well as our current assessment of the underlying merits of the claims and applicable insurance, if any, we believe the resolution of these legal claims will not have a material adverse effect on our financial position, liquidity, cash flows or results of operations. Future developments may, however, result in resolution of these legal claims in a way that could have a material adverse effect. See Item 1A. “Risk Factors” and Item 3, “Legal Proceedings” for further information.

Foreign Operations

Our foreign operations accounted for approximately 58.6% of 2023 consolidated sales and 57.4% of total property, plant and equipment at December 31, 2023. Functional currencies used by these operations include the Chinese yuan, the euro, the British pound, the South African rand, the Indian rupee, and the Canadian dollar. We are exposed to foreign currency exchange risk as a result of transactions by these subsidiaries in currencies other than their functional currencies, and from transactions by our domestic operations in currencies other than the U.S. dollar. The majority of these functional currencies and the other currencies in which we record transactions are fairly stable, although we experienced variability in the current year as more fully discussed in Item 7A. The use of these currencies, combined with the use of foreign currency forward purchase and sale contracts, has enabled us to be sheltered from significant gains or losses resulting from foreign currency transactions. This situation could change if these currencies experience significant fluctuations or the volume of forward contracts changes.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and are based on the selection and application of significant accounting policies, which require management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. There were no material changes to estimates or methodologies used to develop those estimates in 2023. Management believes the following are the more critical judgmental areas in the application of its accounting policies that affect its financial position and results of operations.

Goodwill and Indefinite-Lived Intangible Assets: We evaluate goodwill and indefinite-lived intangible assets for impairment on an annual basis, as of October 1 or whenever events or changes in circumstances indicate that an evaluation should be completed. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include deterioration in general economic conditions, negative developments in equity and credit markets, a decline in stock price and market capitalization, adverse changes in the markets in which we operate, and a trend of negative or declining cash flows over multiple periods. The fair value that could be realized in an actual transaction may differ from that used to evaluate the impairment of goodwill.

Goodwill is analyzed on a reporting unit basis. The reporting units are the same as our operating and reportable segments, which are as follows: Cryo Tank Solutions, Heat Transfer Systems, Specialty Products and Repair, Service & Leasing. To test goodwill for impairment, we first evaluate qualitative factors, such as macroeconomic conditions and our overall financial performance to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying

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amount, including goodwill (the “Step 0 Test”). If we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the first step of the goodwill impairment test is not necessary. Otherwise, we would proceed to the first step of the goodwill impairment test.

Alternatively, we may also bypass the Step 0 Test and proceed directly to the first step of the goodwill impairment test. Under the first step (“Step 1”), we estimate the fair value of our reporting units by considering income and market approaches to develop fair value estimates, which are weighted to arrive at a fair value estimate for each reporting unit. With respect to the income approach, a model has been developed to estimate the fair value of each reporting unit. This fair value model incorporates estimates of future cash flows, estimates of allocations of certain assets and cash flows among reporting units, estimates of future growth rates, and management’s judgment regarding the applicable discount rates to use to discount such estimates of cash flows. With respect to the market approach, a guideline company method is employed whereby pricing multiples are derived from companies with similar assets or businesses to estimate fair value of each reporting unit. If the fair value of the reporting unit exceeds the carrying amount of the net assets assigned to that reporting unit, then goodwill is not impaired, and no further testing is required. However, if the fair value of the reporting unit is less than its carrying amount, the impairment charge is based on the excess of a reporting unit’s carrying amount over its fair value (i.e., we would measure the charge based on the result from Step 1). The assumptions and judgment used by management to estimate future cash flows, allocation of assets and cash flows among reporting units, estimates of future growth rates and selection of discount rates are subject to change due to the economic environment, including such factors as interest rates, expected market returns and volatility of markets served. Changes to the assumptions and estimates used throughout the steps described above may result in a significantly different estimate of the fair value of the reporting units, which could result in a different assessment of the recoverability of goodwill and result in future impairment charges.

In order to assess the reasonableness of the calculated fair values of our reporting units, we also compare the sum of the reporting units’ fair values to our market capitalization and calculate an implied control premium (the excess of the sum of the reporting units’ fair values over the market capitalization). We evaluate the control premium by comparing it to control premiums of recent comparable transactions. If the implied control premium is not reasonable in light of this assessment, we reevaluate our fair value estimates of the reporting units by adjusting the discount rates and other assumptions as necessary.

With respect to indefinite-lived intangible assets, we first evaluate relevant events and circumstances to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If, in weighing all relevant events and circumstances in totality, we determine that it is not more likely than not that an indefinite-lived intangible asset is impaired, no further action is necessary. Otherwise, we would determine the fair value of indefinite-lived intangible assets and perform a quantitative impairment assessment by comparing the indefinite-lived intangible asset’s fair value to its carrying amount. We may bypass such a qualitative assessment and proceed directly to the quantitative assessment. We estimate the fair value of our indefinite-lived assets using the income approach. This may include the relief from royalty method or use of a model similar to the one described above related to goodwill which estimates the future cash flows attributed to the indefinite-lived intangible asset and then discounting these cash flows back to a present value. Under the relief from royalty method, fair value is estimated by discounting the royalty savings, as well as any tax benefits related to ownership to a present value. The fair value from either approach is compared to the carrying value and an impairment is recorded if the fair value is determined to be less than the carrying value. Management’s estimates regarding future cash flows, selection of discount rates and estimated tax benefits are subject to change due to various economic factors and changes to the assumptions and estimates used throughout the steps described above and may result in a significantly different estimate of the fair value of indefinite-lived intangible assets which could result in a different assessment of the recoverability of these assets and result in future impairment charges.

As of October 1, 2023, 2022 and 2021 (“annual reporting unit assessment dates”) we elected to bypass the Step 0 test and based on our Step 1 test, we determined that the fair value of each of our reporting units was greater than its respective carrying value at each annual reporting unit assessment date, and therefore, no further action was necessary.

As of October 1, 2023, we elected to bypass the Step 0 test and based on our Step 1 test, we determined that the fair value of each of our indefinite-lived intangible assets was greater than its respective carrying value, and therefore, no further action was necessary. As of October 1, 2022 and 2021, we also elected to bypass the qualitative assessment for indefinite-lived intangible assets with the exception of Earthly Labs and Fronti Fabrications, Inc trade names for the October 1, 2022 assessments. Based on our qualitative assessment of these trade names, we determined that it is not “more likely than not” that the fair value of each of these trade names is less than its respective carrying amount. Based on our quantitative assessments of all other indefinite-lived intangible assets, we determined that the fair value of each of the indefinite-lived intangible assets was greater than its respective carrying value at both October 1, 2022 and 2021, and therefore, no further action was necessary.

Long-Lived Assets: We monitor our property, plant and equipment, and finite-lived intangible assets for impairment indicators on an ongoing basis. If impairment indicators exist, assets are grouped and tested at the lowest level for which

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identifiable cash flows are available, and we perform the required analysis and record impairment charges if applicable. In conducting this analysis, we compare the undiscounted cash flows expected to be generated from the long-lived assets to the related net book values. If the undiscounted cash flows exceed the net book value, the long-lived assets are considered not to be impaired. If the net book value exceeds the undiscounted cash flows, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived assets. Fair value is estimated from discounted future net cash flows (for assets held for use) or net realizable value (for assets held for sale). In assessing the recoverability of our long-lived assets, a significant amount of judgment is involved in estimating the future cash flows, discount rates and other factors necessary to determine the fair value of the respective assets. Key assumptions used in these estimates include industry and market conditions, costs to produce and projected revenue growth. If these estimates or the related assumptions change in the future, we may be required to record impairment charges for these assets in the period such determination was made. We amortize intangible assets that have finite lives over their estimated useful lives. We had no long-lived asset impairments in the last three years.

Business Combinations: We account for business combinations in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations.” We recognize and measure identifiable assets acquired and liabilities assumed based on their estimated fair values. The excess of the consideration transferred over the fair value of the net assets acquired, including identifiable intangible assets, is assigned to goodwill. We estimate the fair value of identifiable intangible assets under income approaches where the fair value models incorporate estimates of future cash flows, estimates of allocations of certain assets and cash flows, estimates of future growth rates, and management’s judgment regarding the applicable discount rates to use to discount such estimates of cash flows. Assigning estimated fair values to the identifiable assets acquired and liabilities assumed requires the use of significant estimates, judgments, inputs and assumptions. Such assumptions are based in part on historical experience, industry and market conditions and information obtained from management of the acquired companies and are thus inherently uncertain. As additional information becomes available, we may further revise the preliminary acquisition consideration allocation during the remainder of the measurement period, which shall not exceed twelve months from the closing of the acquisition.

Investments in Equity Securities Without a Readily Determinable Fair Value: Our investments in equity securities for which there is no readily determinable fair value are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. As part of our assessment for impairment indicators, judgement is involved in considering significant deterioration in the earnings performance, credit rating, asset quality or overall business prospects of the investee as well as significant adverse changes in the external environment in which an investee operates, a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates or factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations, working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants. Furthermore, management must use reasonable efforts to identify an observable price change on a timely basis. Despite these efforts, we may not be able to obtain this information. If we determine that an investment is impaired, we shall measure the investment at fair value, which may involve a significant degree of judgement and subjectivity. The carrying amount of our investments in equity securities without a readily determinable fair value was $80.3 million as of December 31, 2023.

Contingencies: On an ongoing basis, we assess the potential liabilities related to any lawsuits or claims brought against us. While it is typically very difficult to determine the timing and ultimate outcome of such actions, management uses its best judgment to determine if it is probable that we will incur an expense related to the settlement or final adjudication of such matters and whether a reasonable estimation of such probable loss, if any, can be made. In assessing probable losses, we take into consideration estimates of the amount of insurance recoveries, if any, which are recorded in other current assets when recoverability is probable. We accrue a liability when we believe a loss is probable and the amount of loss can be reasonably estimated. Due to the inherent uncertainties related to the eventual outcome of litigation and potential insurance recoveries, it is possible that certain matters may be resolved for amounts materially different from any provisions or disclosures that we have previously made.

Revenue Recognition: Revenue is recognized when (or as) we satisfy performance obligations by transferring a promised good or service, an asset, to a customer. An asset is transferred to a customer when, or as, the customer obtains control over that asset. In most contracts, the transaction price includes both fixed and variable consideration. The variable consideration contained within our contracts with customers includes discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties and other similar items. When a contract includes variable consideration, we evaluate the estimate of the variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration estimates are updated at each reporting date.

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In certain contracts, we are engaged to engineer and build highly-customized products and systems. In these circumstances, we produce an asset with no alternative use and have a right to payment for performance completed to date. For these contracts, revenue is recognized as we satisfy the performance obligations by an allocation of the transaction price to the accounting period computed using input methods such as costs incurred. Selecting the method used to measure progress towards completion for our contracts requires judgment and is based on the nature of the products to be provided. Accounting for contracts using the costs incurred input method requires management judgment relative to assessing risks and their impact on the estimates of revenue and costs. Certain factors can impact these estimates including, but not limited to, the potential for incentives or penalties on performance, schedule delays, labor productivity, the complexity of work performed and the cost and availability of materials. Revisions to estimated cost to complete a project that result from inefficiencies in our performance that were not expected in the pricing of the contract are expensed in the period in which these inefficiencies become known. Contract modifications can change a contract’s scope, price, or both. Approved contract modifications are accounted for as either a separate contract or as part of the existing contract depending on the nature of the modification which is subject to management’s judgment.

Income Taxes: The Company and its U.S. subsidiaries file a consolidated federal income tax return. Deferred income taxes are provided for temporary differences between financial reporting and the consolidated tax return in accordance with the liability method. A valuation allowance is provided against net deferred tax assets when conditions indicate that it is more likely than not that the benefit related to such assets will not be realized. In the event that we change our determination as to the amount of deferred tax assets that can be realized, the valuation allowance will be adjusted with a corresponding impact to the provision for income taxes in the period in which such determination is made. Management must make assumptions, judgments and estimates to determine our deferred tax assets and liabilities, current provision for income taxes and valuation allowances. In making such assumptions we consider all available evidence including past operating results, estimates of future taxable income and the feasibility of tax planning strategies.

We utilize a two-step approach for the recognition and measurement of uncertain tax positions. The first step is to evaluate the tax position and determine whether it is more likely than not that the position will be sustained upon examination by tax authorities. The second step is to measure the tax benefit as the largest amount that is more likely than not of being realized upon settlement. Our income tax positions are based on research and interpretations of the income tax laws and rulings in each of the jurisdictions in which we do business. Due to the subjectivity of interpretations of laws and rulings in each jurisdiction, the differences and interplay in tax laws between those jurisdictions, as well as the inherent uncertainty in estimating the final resolution of complex tax audit matters, management’s estimates of income tax liabilities may differ from actual payments or assessments. Resolution of uncertain tax positions could have a material adverse effect or materially benefit our results of operations in future periods depending on their ultimate resolution.

We use an estimate of our annual effective tax rate at each interim reporting period based on the facts and circumstances available at that time, while the actual effective tax rate is calculated at year-end. In calculating these rates, significant judgment is involved regarding the application of global income tax laws and regulations and when projecting the jurisdictional mix of income. Additionally, interpretation of tax laws, court decisions or other guidance provided by taxing authorities influences our estimate of the effective income tax rates. As a result, our actual effective income tax rates and related income tax liabilities may differ materially from our estimated effective tax rates and related income tax liabilities. Any resulting differences are recorded in the period they become known. An increase or decrease of one percentage point in our effective tax rate would have affected our 2023 net income by $0.6 million.

Recent Accounting Standards

For disclosures regarding recent accounting standards, refer to Note 2, “Significant Accounting Policies,” of our consolidated financial statements included under Item 15, “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

Forward-Looking Statements

We are making this statement in order to satisfy the “safe harbor” provisions contained in the Private Securities Litigation Reform Act of 1995. This Annual Report includes “forward-looking statements.” These forward-looking statements include statements relating to our business, including statements regarding completed acquisitions and investments and related accretion or statements with respect to the use of proceeds or redeployment of capital from recent divestitures, as well statements regarding revenues, cost and commercial synergies and efficiency savings, objectives, future orders, margins, segment sales mix, earnings or performance, liquidity and cash flow, inventory levels, capital expenditures, supply chain challenges, inflationary pressures including materials costs and pricing increases, business trends, clean energy market opportunities including addressable market and projected industry-wide investments, carbon and GHG emission targets, governmental initiatives, including executive orders and other information that is not historical in nature. In some cases, forward-looking

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statements may be identified by terminology such as “may,” “will”, “should,” “expects,” “anticipates,” “believes,” “projects,” “forecasts,” “outlook,” “guidance,” “target,” “continue” or the negative of such terms or comparable terminology. Forward-looking statements contained herein (including future cash contractual obligations, liquidity, cash flow, orders, results of operations, projected revenues, margins, capital expenditures, industry and business, trends, clean energy and other new market or expansion opportunities, cost and commercial synergies and savings objectives, and government initiatives among other matters) or in other statements made by us are made based on management’s expectations and beliefs concerning future events impacting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by forward-looking statements.

The risk factors discussed in Item 1A. “Risk Factors” and the factors discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” among others, could affect our future performance and liquidity and value of our securities and could cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us or on our behalf. These factors should not be construed as exhaustive and there may also be other risks that we are unable to predict at this time. All forward-looking statements included in this Annual Report are expressly qualified in their entirety by these cautionary statements.

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this Annual Report and are expressly qualified in their entirety by the cautionary statements included in this Annual Report. We undertake no obligation to update or revise forward-looking statements which may be made to reflect events or circumstances that arise after the filing date of this document or to reflect the occurrence of unanticipated events, except as otherwise required by law.

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our results of operations and financial condition should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements. Actual results may differ materially from those discussed below. See “Forward-Looking Statements” at the end of this discussion and Item 1A. “Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with this discussion.

Overview

We are a leading independent global manufacturer of highly engineered cryogenic equipment servicing multiple applications in the industrial gas and clean energy markets. Our unique product portfolio is used in every phase of the liquid gas supply chain, including upfront engineering, service and repair. Being at the forefront of the clean energy transition, Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas, CO2 Capture and water treatment, among other applications. We are committed to excellence in environmental, social and corporate governance (ESG) issues both for our company as well as our customers. With 29 global manufacturing locations from the United States to Asia, India and Europe, we maintain accountability and transparency to our team members, suppliers, customers and communities.

Macroeconomic Impacts

During 2022, we had record backlog, record sales, record gross profit and record operating income due to broad-based demand for our products, strong execution and continued pricing actions. The current conflict between Russia and Ukraine and the related sanctions imposed by countries against Russia as well as heightened tensions between the U.S and China are creating uncertainty in the global economy. While we do not have operations in Russia or Ukraine, we are unable to predict the impact these actions will have on the global economy or on our business, financial condition and results of operations. These events did not have a material adverse effect on our reported results for 2022, however we will continue to actively monitor in terms of their potential impact on our results of operations beyond 2022.

Environmental, Social, Governance

Chart is proud to be at the forefront of the clean energy transition as a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas, carbon capture and water treatment, among other applications. We also captured clean power, clean water, clean food and clean industrials as our unique offering for the Nexus of CleanTM. This leadership position is possible not only because we have the broadest offering of clean innovative solutions for the various end markets we serve, but also because we are committed to global responsibility. Reporting our ESG performance is one of the ways we demonstrate accountability and transparency to our team members, suppliers, customers, shareholders and communities. Below are some highlights of our ESG efforts, and further information can be found in our third Annual Sustainability report with scorecard which was released in April 2022. We intend to release our fourth annual sustainability report in April 2023.

•We reported a 0.52 Total Recordable Incident Rate (TRIR), a year-end record, for the year ended December 31, 2022, with emphasis on safety as our #1 priority and focus on all team members being empowered and authorized to stop work if they see an unsafe or potentially unsafe situation.

•We measure progress through Sustainability Accounting Standards Board (SASB) and Task Force on Climate-Related Financial Disclosures (TCFD) indices, as well as contributing to the Global Reporting Initiative (GRI) and United Nations Sustainable Development Goals (SDGs).

•We utilize Riskmethods analytics to proactively monitor our supply chain for proper governance in our supplier network including their climate targets and other ESG activities.

•We have a Global ESG Committee, Global Safety Council, and Global Diversity & Inclusion Committee, all comprised of team member volunteers and engagement from our global locations.

•Our Global ESG Committee has five sub-committees focused on energy management, zero waste, electrification, renewable energy and water management.

•We have recently entered into a sustainability-linked banking agreement with covenants tied to our Green House Gas (“GHG”) emission reductions’ actual performance.

•We have set a target to reduce our carbon intensity 30% by 2030 and have specific initiatives in place to help us meet this goal. In 2021, we made progress towards achieving our target by reducing GHG Intensity by almost 14% year-over-year.

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•In terms of lowering our own emissions, we made plant improvements including energy efficient upgrades for various equipment, replacing diesel powered equipment with electric and installing LED lighting in office spaces. In 2021, Chart reduced Scope 2 emissions by 9.7%.

•We are our helping customers to achieve their own sustainability targets in a number of different ways whether that’s through reducing the amount of plastic used in packaging to lowering greenhouse gas emissions by enabling the transition towards cleaner fuels.

•We have an independent Board of Directors that is comprised of seven directors (four of our seven directors are female and four of our seven are diverse) and governed with a separate independent Chairwoman and CEO.

•We hold quarterly reviews on ESG with our Board of Directors.

•We link our executives and their direct reports short-term incentive payout (25% of the strategic and operational goals) to a metric driven, percentage-reduction ESG metric, and have done this for two years.

•Our team volunteers in their communities with a focus on supporting children and families, ending hunger and improving health. We offer every team member worldwide one paid day off each year to volunteer in our communities, and we donated over $120,000 to charities in the communities we work in during the 2021 year. In 2021, Chart started matching employee donations up to $250 per employee per year to charitable organizations.

•We have an employee relief fund for our own team members that need assistance.

•Our team members raised over $30,000 in 2021 and $25,000 in 2022 to support women through Dress For Success.

•In 2021, we received the following ESG-oriented recognition:

◦World LNG Award for Energy Transition 2021 Finalist

◦Gastech 2021 Emission Reduction Champion – Organization of the Year Award Winner

◦Gastech 2021 Organisation Championing Diversity & Inclusion Finalist

◦Gastech 2021 Engineering Partnership of the Year Finalist

◦S&P Global Platts Energy Awards Excellence in LNG Finalist (2021)

◦S&P Global Platts Energy Awards Corporate Social Responsibility (Diversified) Award Finalist (2021)

•In 2022, we received the following ESG-oriented recognition:

◦S&P Global Platts Energy Awards 2022 “Energy Transition - LNG” Finalist

◦S&P Global Platts Energy Awards 2022 “Deal of the Year - Strategic” Finalist

◦2022 Frost & Sullivan Institute Enlightened Growth Leadership Award

◦goBeyondProfit’s 2022 “In Good Company Report - One of the Most Generous Companies in Georgia (USA)”

2022 Highlights

Record order activity contributed to record ending total backlog of $2,338.1 million as of December 31, 2022 compared to $1,190.1 million as of December 31, 2021, representing an increase of $1,148.0 million or 96.5%, which reflects the broad-based demand we continue to see year-over-year across our product categories. The increase in backlog was largely driven by record orders for the year ended December 31, 2022 of $2,779.9 million compared to $1,676.1 million for the year ended December 31, 2021 representing an increase of $1,103.8 million or 65.9%. Record order intake in our Heat Transfer Systems segment of $1,417.6 million for 2022 compared to $312.0 million for 2021, was mainly driven by higher order intake for LNG including big and small-scale LNG, as well as floating LNG during 2022. Record order intake in our Repair, Service & Leasing segment of $218.9 million in 2022 compared to $180.6 million in 2021, was mainly driven by higher order intake within lifecycle services, aftermarket fans and our leasing business. Record orders in our Specialty Products segment for 2022 of $665.5 million compared to $648.6 million for 2021 were mainly driven by strong order intake for hydrogen and helium liquefaction, space, water treatment, carbon capture and other specialty applications. Heat Transfer Systems segment backlog totaled a record $1,300.1 million as of December 31, 2022 compared to $370.4 million as of December 31, 2021. Specialty Products segment backlog totaled a record $645.9 million as of December 31, 2022, compared to $438.2 million as of December 31, 2021. Cryo Tank Solutions segment backlog totaled $371.0 million as of December 31, 2022, also a record high.

Consolidated sales increased to a record $1,612.4 million in 2022 from $1,317.7 million in 2021, representing an increase of $294.7 million or 22.4% (20.3% organically), mainly driven by growth in our Heat Transfer Systems segment on favorable sales in process systems related to big and small-scale LNG liquefaction and floating LNG, as well as gains within our Cryo Tank Solutions segment on favorable sales in storage equipment and mobile equipment, within our Repair, Service & Leasing segment on favorable sales in parts, repairs, and services, aftermarket fans, aftermarket air cooled heat exchangers and in our lifecycle business and within our Specialty Products segment on favorable sales in hydrogen and helium applications, water treatment, space applications, food & beverage applications and carbon capture. The consolidated sales increase was bolstered

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by sales from acquisitions. Consolidated gross profit in 2022 increased by $83.2 million ($74.6 million organically) from $324.2 million to a record $407.4 million or 25.7% compared to 2021. Gross profit margin of 25.3% in 2022 increased from 24.6% in 2021. The increase in gross profit and gross profit margin for 2022 compared to 2021 demonstrates our progress in improvement in our margin profile as we continued to take further pricing and cost reduction actions.

Consolidated SG&A expenses as a percentage of consolidated sales for 2022 decreased by 1.6% as compared to 2021 primarily due to the effect of cost reduction actions we took in 2022.

Outlook

As previously announced, in November of 2022 we signed a definitive agreement to acquire Howden, a leading global provider of mission critical air and gas handling products and services. The combination of Chart and Howden furthers our global leadership position in highly engineered process technologies and products serving the Nexus of CleanTM – clean power, clean water, clean food and clean industrials. We are currently pursuing divestitures of two significant product lines related to the combined business. While these proposed divestitures are at preliminary stages and there can be no assurances of the completion of these activities, we continue to target a completion of these within the next three to six months and continue to anticipate combined proceeds of approximately $500 million from these divestitures.

We are reiterating our Chart standalone 2023 sales outlook range of $2.10 billion to $2.20 billion, which includes only big LNG projects that are in backlog as of December 31, 2022. We are confident in achieving this sales range, underpinned by five key themes: (1.) It is not unusual for project revenue to shift between months. We anticipate realizing pushed fourth quarter 2022 revenue in 2023 based on customer and project timing. (2.) Our outlook does not include any additional mid-size or large project orders between now and the end of the first half 2023, which could provide additional revenue in the second half of 2023. (3) Even though we are seeing early end market improvement in HLNG vehicle tank sales, our forecast for HLNG vehicle tanks is flat with 2022. (4.) We head into 2023 with record backlog of $2.34 billion. As of December 31, 2022, we had approximately 60% of the full year 2023 sales outlook already in backlog, which is meaningfully higher than in prior years. (5.) We have existing capacity to delivery on our backlog as well as any potential, high probability, new orders that could materialize throughout the year.

Our guidance does not include the operational impact of the pending acquisition with Howden, which is expected to close within the next 45 days. We continue to invest in our automation, process improvement, and productivity activities across Chart, with total anticipated 2023 capital expenditures spend of $60 million to $65 million for our existing business.

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Operating Results

The following table sets forth the percentage relationship that each line item in our consolidated statements of income represents to sales for the years ended December 31, 2022, 2021 and 2020 (dollars in millions):

_______________

(1)Cost of sales includes restructuring (credits)/costs of $(1.0), $2.6 and $5.7 for the years ended December 31, 2022, 2021 and 2020, respectively.

(2)Selling, general and administrative expenses includes restructuring costs of $0.9 and $7.9 for the years ended December 31, 2021, and 2020, respectively.

(3)Includes deal-related and integration costs of $17.6 for the year ended December 31, 2022.

(4)Includes share-based compensation expense of $10.6, $11.2 and $8.6, representing 0.7%, 0.8% and 0.7% of sales, for the years ended December 31, 2022, 2021 and 2020, respectively.

(5)Includes $16.0 impairment of our trademarks and trade names indefinite-lived intangible assets related to the AXC business in our Heat Transfer Systems segment for the year ended December 31, 2020.

(6)In conjunction with the amendment of our credit facilities in 2021, we recognized charges of $4.1 in unamortized debt issuance cost write offs associated with previous credit facilities and new debt issuance costs, which are classified as financing costs amortization in our consolidated income statement for the year ended December 31, 2021.

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Consolidated Results for the Years Ended December 31, 2022, 2021 and 2020

The following table includes key metrics used to evaluate our business and measure our performance and represents selected financial data for our operating segments for the years ended December 31, 2022, 2021 and 2020 (dollars in millions). Further detailed information regarding our operating segments is presented in Note 4, “Segment and Geographic Information,” of the consolidated financial statements included under Item 15 “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

Selected Segment Financial Information