CHART INDUSTRIES INC (GTLS) FY 2021 MD&A

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 over 25 global manufacturing locations including in the United States, Europe, China, India, Australia and South America, we maintain accountability and transparency to our team members, suppliers, customers and communities.

Macroeconomic Impacts

Despite strong order and backlog growth, supply chain, labor and logistics issues weighed on business in the third and fourth quarters of 2021, in particular on the gross margin line as our series of price increases were not able to completely keep pace with rapidly accelerating material costs, freight, logistics and backlog timing. Furthermore, the uncertainty associated with the coronavirus (Covid-19) pandemic remains, which we continue to actively monitor in terms of its impact on our results of operations beyond 2021. The extent to which our operations will be impacted by the Covid-19 pandemic will largely depend on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity or resurgence of the Covid-19 virus and its variants and actions by government authorities to contain the pandemic or treat its impact, among other things.

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 as our 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 Environmental, Social, Governance (“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 second Annual Sustainability report with scorecard which was released in April 2021. We intend to release our third annual sustainability report in April 2022.

•We reported a 0.80 Total Recordable Incident Rate (TRIR) for the year ended December 31, 2021, 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 reported no recordable incidents at any Chart location in December 2021.

•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 every one of 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 cutting-edge sustainability-linked banking agreement with covenants tied to our Green House Gas (“GHG”) emission reductions’ actual performance.

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•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 2020, we made progress towards achieving our target by reducing GHG Intensity by almost 6.0% year-over-year.

•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 2020, Chart reduced Scope 1 and Scope 2 emissions by 8.5% and 8.9%, respectively, while reducing total energy consumption by almost 16.0%.

•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 nine directors (four of our nine directors are female and five of our nine are diverse) and governed with a separate Chairman and CEO.

•We hold regular meetings on the topic and reviews 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. In 2020, we donated over 4,000 masks in addition to medical oxygen equipment to respond to the Covid-19 pandemic. 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.

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

•Our team members raised over $30,000 to support women adversely affected by the COVID-19 pandemic 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)

2021 Highlights

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, carbon capture and water treatment, among other applications. During 2021, we continued to invest organically and inorganically for capacity, automation and manufacturing optimization as well as in the “Nexus of Clean.” We executed on a number of investments and acquisitions in 2021 to capitalize on clean energy market opportunities. In the first quarter of 2021, we acquired Cryogenic Gas Technologies, Inc. (“Cryo Technologies”), to grow our presence in liquefaction technology for the clean power market. During the third quarter of 2021, we closed on L.A. Turbine, a global leader in turboexpanders. We also acquired AdEdge Holdings, LLC (“AdEdge”) during the third quarter in order to grow our presence in the clean water market. Our ChartWater™ platform, consisting of AdEdge and BlueInGreen process technologies with Chart equipment, posted record orders, backlog and sales in both the fourth quarter 2021 as well as the full year of 2021 and has been a leading acquisition for synergy achievement in the first year of ownership. During the fourth quarter of 2021, we completed the immediately accretive acquisition of Earthly Labs Inc. (“Earthly Labs”), a leading provider of small-scale carbon capture systems for use in municipal, agriculture and food & beverage applications.

Strong order activity contributed to record ending total backlog of $1,190.1 million as of December 31, 2021 compared to $810.0 million as of December 31, 2020 representing an increase of $380.1 million or 46.9%, 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 as of December 31, 2021 of $1,676.1 million compared to $1,210.1 million as of December 31, 2020 representing an increase of $466.0 million or 38.5%. Strong orders in our Specialty Products and Cryo Tank Solutions segments were mainly driven by the combination of larger liquefaction orders for LNG, hydrogen and helium as well as orders in distribution and storage, HLNG vehicle tanks, LNG regasification, laser applications, food & beverage applications, storage equipment and mobile equipment.

Consolidated sales increased to a record $1,317.7 million in 2021 from $1,177.1 million in 2020, representing an increase of $140.6 million or 11.9% (6.0% organically), which was mainly driven by our Specialty Products, Cryo Tank Solutions and

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Repair, Service & Leasing segments. This increase was partially offset by lower sales in our Heat Transfer Systems segment mainly due to higher sales driven in 2020 relative to Venture Global’s Calcasieu Pass LNG export terminal project (“Calcasieu Pass”). However, we continue to see signs of a slight recovery in market conditions within this segment as indicated by an increase in customer order activity and inquiry. Specialty Products segment record sales of $432.9 million in 2021 compared to $242.6 million in 2020 represents an increase of $190.3 million or 78.4% (52.8% organically), driven by favorable sales in hydrogen and helium applications, HLNG vehicle tanks, water treatment equipment sales and food & beverage applications. This increase was bolstered by sales from the acquisitions mentioned above. Consolidated gross profit decreased during 2021 compared to 2020 by $7.9 million or 2.4%, and 2021 gross profit margin of 24.6% decreased from 28.2% in 2020. The decrease in gross profit margin compared to 2020 was primarily driven by higher material prices due to market conditions for all segments overall as discussed in the macroeconomic impacts section above, the related strategic move to carry a higher level of raw materials in inventory in order to alleviate potential supply shortages, and Calcasieu Pass volume mix which drove higher margins in 2020 in our Heat Transfer Systems segment.

Outlook

Considering our record order year in 2021, record order quarter in the fourth quarter 2021 and record backlog as of December 31, 2021, as well as visibility to our strongest ever commercial pipeline of potential work, we expect significant year-over-year sales growth. This positive outlook does not include any additional or new Big LNG projects (although orders are expected in the first half of 2022), yet it does include the impact of engineering work which began for two Big LNG projects as well as our onsite process engineering work at Venture Global Calcasieu Pass. We anticipate the first half of 2022 will include a margin drag from historical levels from the macro challenges but increasingly offset in each of the first two quarters of 2022 by the positive impact from actions we have taken to date.

Capacity and productivity organic investments are being made, which is reflected in our higher than maintenance capital expenditure outlook for 2022. We anticipate spending approximately $50 million to $55 million in capital expenditures in 2022, driven by investments in replicating production lines in strategic locations as well as implementing additional automation across our factories, which has been underway but we are investing to accelerate.

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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, 2021, 2020 and 2019 (dollars in millions):

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(1)Cost of sales includes restructuring costs of $2.6, $5.7 and $12.2 for the years ended December 31, 2021, 2020 and 2019, respectively.

(2)Selling, general and administrative expenses includes restructuring costs of $0.9, $7.9 and $3.4 for the years ended December 31, 2021, 2020 and 2019, respectively.

(3)Includes transaction-related costs of $2.5, $2.6 and $5.4 for the years ended December 31, 2021, 2020 and 2019, respectively.

(4)Includes transaction-related costs of $2.8 and $4.3 related to integration activities for previous acquisitions for the years ended December 31, 2021 and 2019, respectively.

(5)Includes share-based compensation expense of $11.2, $8.6 and $8.8, representing 0.8%, 0.7% and 0.7% of sales, for the years ended December 31, 2021, 2020 and 2019, respectively.

(6)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.

(7)Includes $8.0 and $7.6 of non-cash interest accretion expense related to the carrying amount of the 1.00% Convertible Senior Subordinated Notes due November 2024 (the “2024 Notes”), representing 0.7% and 0.6% of sales for the years ended December 31, 2020 and 2019, respectively.

(8)In conjunction with the amendment of our credit facilities, 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, 2021, 2020 and 2019

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, 2021, 2020 and 2019 (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

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(1)Restructuring costs for the years ended:

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

•December 31, 2020 were $13.6 ($2.7 – Cryo Tank Solutions, $7.4 – Heat Transfer Systems, $0.7 – Specialty Products, $0.2 – Repair, Service & Leasing and $2.6 – Corporate); and

•December 31, 2019 were $15.6 ($9.1 – Cryo Tank Solutions, $4.5 – Heat Transfer Systems, $0.3 – Specialty Products, $1.5 – Repair, Service & Leasing and $0.2 – Corporate).

(2)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.

(3)Includes transaction-related costs of $2.5, $2.6 and $5.4 for the years ended December 31, 2021, 2020 and 2019 respectively.

(4)Includes transaction-related costs of $2.8 and $4.3 related to integration activities for previous acquisitions for the years ended December 31, 2021 and 2019, respectively.

Results of Operations for the Years Ended December 31, 2021 and 2020

Sales in 2021 increased by $140.6 million ($70.9 million organically), from $1,177.1 million to a record $1,317.7 million, or 11.9%. This increase was primarily driven by growth in our Specialty Products segment on favorable sales in hydrogen and helium applications, HLNG vehicle tanks, water treatment equipment sales and food & beverage applications, within our Cryo Tank Solutions segment on favorable sales in mobile equipment, engineered tanks and storage systems, and within our Repair, Service & Leasing segment on favorable sales in our leasing business. This increase was partially offset by the continued softness in demand for midstream and upstream compression equipment and timing of sales recognized relative to Calcasieu Pass within our Heat Transfer Systems segment.

Gross profit in 2021 decreased by $7.9 million ($32.6 million decrease organically) from $332.1 million to $324.2 million or 2.4% compared to 2020. Gross profit margin of 24.6% in 2021 decreased from 28.2% in 2020. The decrease in gross profit margin for 2021 compared to 2020 was primarily driven by macroeconomic conditions as our price increases lagged more than the anticipated rapidly accelerating material prices and freight costs for all segments overall and Calcasieu Pass volume mix which drove higher margins in 2020 in our Heat Transfer Systems segment, partially offset by higher gross profit margins within certain recently acquired businesses. Restructuring costs recorded to cost of sales were $2.6 million and $5.7 million for the years ended December 31, 2021 and 2020, respectively.

Consolidated SG&A expenses increased by $18.6 million or 10.4% during 2021 compared to the same period in 2020 primarily driven by a ramp up in our Specialty Products business which drove higher SG&A expenses in the segment, SG&A expenses related to recent acquisitions and higher share-based compensation expense in Corporate, partially offset by lower SG&A expenses in our Heat Transfer Systems segment due to lower employee-related costs and in our Cryo Tank Solutions segment due to a $2.6 million gain on sale of a facility in China included in SG&A expenses for the year ended December 31, 2020. Furthermore, lower restructuring costs were recorded to consolidated SG&A expenses, which were $0.1 million and $2.4 million for the years ended December 31, 2021 and 2020, respectively.

Asset Impairments

We recorded an impairment loss of $16.0 million during 2020 relative to our $55.0 million trademarks and trade names indefinite-lived intangible asset of our AXC business (“AXC Intangible Asset”) in our Heat Transfer Systems segment. Industry-wide softness in demand for midstream and upstream compression equipment represented impairment indicators requiring us to re-evaluate the fair value of the AXC Intangible Asset. We determined the fair value of the AXC Intangible Asset under the relief-from-royalty method and conducted an impairment test as defined in the Critical Accounting Estimates

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section. We determined that the fair value of the AXC Intangible Asset was $39.0 million and impaired the AXC Intangible Asset by a value equal to the difference in the carrying amount and calculated fair value.

Interest Expense, Net and Financing Costs Amortization

Interest expense, net for the year ended December 31, 2021 and 2020 was $10.7 million and $17.7 million, respectively. The decrease in interest expense, net, is primarily due to lower borrowings outstanding on our term loan due June 2024 during 2021 as compared to 2020. Furthermore, we no longer recognize interest accretion of convertible notes discount due to a change in accounting principle adopted at the beginning of fiscal year 2021 whereas we recognized $8.0 million in interest accretion expense in 2020. For further information regarding the change in accounting principle, refer to Note 2, “Significant Accounting Policies” in this report. Interest expense, net for both the years ended December 31, 2021 and 2020 included $2.6 million of 1.0% cash interest and $9.0 million and $7.0 million in interest related to borrowings on our previous and current senior secured revolving credit facility, respectively.

For 2021 and 2020, financing costs amortization was $8.3 million and $4.3 million, respectively. The increase of $4.0 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, 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 associated with the Amended Credit Agreement resulting in a total one-time charge to net income of $4.1 million.

Unrealized (Gain) Loss On Investments In Equity Securities

During 2021, we recognized an unrealized gain on investments in equity securities 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 price change in an orderly transaction for similar instruments of the same issuer and a $2.2 million unrealized gain on the mark-to-market 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 (Euronext Paris: MCPHY - ISIN; FR0011742329). During 2020, we recognized an unrealized gain of $17.0 million on the mark-to-market adjustment of our investment in McPhy, partially offset by a $2.9 million unrealized loss on the mark-to-market adjustment of our investment in Stabilis.

Realized Gain on Investments 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 million on the remeasurement of our initial 15% investment, which is recorded as realized gain on investment in equity securities in the consolidated statement of income for the year ended December 31, 2021.

Foreign Currency Loss (Gain)

Foreign currency losses were $0.9 million in both of the years ended December 31, 2021 and 2020. Foreign currency fluctuates due to exchange rate volatility, especially with respect to the euro and Chinese yuan.

Gain Bargain Purchase

As a result of the October 13, 2020 Alabama Trailers acquisition, we recorded a bargain purchase gain of $5.0 million for the year ended December 31, 2020.

Income Tax Expense

Income tax expense of $13.5 million and $14.9 million for the years ended December 31, 2021 and 2020, respectively, represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of 18.2% and 17.5%, respectively. 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% due primarily 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 17.5% for the year ended December 31, 2020 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.

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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 $59.1 million and $68.9 million for 2021 and 2020, respectively.

Discontinued Operations

The financial results of our cryobiological products business formerly reported in our D&S West segment are reflected in our consolidated financial statements as discontinued operations for periods prior to 2021. For further information, refer to Note 3, “Discontinued Operations.”

Results of Operations for the Years Ended December 31, 2020 and 2019

Sales in 2020 decreased by $38.4 million from $1,215.5 million to $1,177.1 million, or 3.2%. Heat Transfer Systems segment sales decreased by $71.9 million during 2020 as compared to 2019 primarily due to an industry-wide softness in demand for midstream and upstream compression equipment. This decrease within the Heat Transfer Systems segment was partially offset by revenue contributions from the continued execution of our backlog on big LNG, including Venture Global’s Calcasieu Pass LNG export terminal project and other petrochemical applications and our Specialty Products segment where sales increased by $34.7 million as compared to 2019 primarily driven by favorable sales in hydrogen equipment and HLNG vehicle tanks.

Gross profit in 2020 increased by $34.6 million from $297.5 million to $332.1 million or 11.6% compared to 2019. Gross profit as a percentage of sales increased within each of our four segments in 2020 as compared to 2019 primarily as a result of ongoing cost structure improvement across the global organization, the impact of higher restructuring costs in 2019 within our Cryo Tank Solutions segment and product mix, especially where Venture Global’s Calcasieu Pass LNG export terminal project drove higher margins in our Heat Transfer Systems segment.

SG&A expenses decreased by $27.5 million, or 13.4% in 2020 compared to 2019 across multiple SG&A categories primarily as a result of cost reduction initiatives. During 2020, we implemented certain cost reduction actions across all segments and corporate to appropriately size our workforce with demand as well as eliminate redundant work. Costs were primarily related to headcount reductions. These actions resulted in total restructuring costs of $13.6 million for the year ended December 31, 2020, consisting of mainly employee severance costs. During 2020, costs to transfer operations of our heat exchanger leased facility in Tulsa, Oklahoma to our Beasley, Texas location at which we own 260 acres of land were $2.7 million. These costs were associated with severance, relocation and moving expenses. This was a cost reduction measure within our Heat Transfer Systems segment to structure the business for profitable growth in equipment for midstream and upstream energy applications.

During 2019, we implemented certain cost reduction or avoidance actions, including facility consolidations at certain of our U.S. properties, and a streamlining of the commercial activities surrounding our Lifecycle business in our Repair, Service & Leasing segment, geographic realignment of our manufacturing capacity and a facility closure in Asia, as well as departmental restructuring, including headcount reductions in each of our four segments. These actions resulted in total restructuring costs of $15.6 million, consisting of employee severance costs, disposals of property, plant and equipment and other costs. Restructuring costs for 2019 reflect a $1.6 million credit to Repair, Service & Leasing segment restructuring costs recorded in the second quarter of 2019 due to the successful negotiation of a lease termination for a facility for our previous Lifecycle business. These restructuring activities were substantially completed by the end of 2019.

Asset Impairments

As discussed in the Results of Operations for the Years Ended December 31, 2021 and 2020 section above, we recorded an impairment loss of $16.0 million during 2020 relative to our AXC Intangible Asset.

Interest Expense, Net and Financing Costs Amortization

Interest expense, net for the year ended December 31, 2020 and 2019 was $17.7 million and $14.7 million, respectively. Interest expense, net for the year ended December 31, 2020 included $2.6 million of 1.0% cash interest and $8.0 million of non-cash interest accretion expense related to the carrying value of the convertible notes due 2024, and $7.0 million in interest related to borrowings on our previous senior secured revolving credit facility and term loan. For 2020 and 2019, financing costs amortization was $4.3 million and $3.0 million, respectively. The increase of $1.3 million was primarily due to recognition of a full year of financing costs amortization related to the term loan in 2020 as compared to six months of financing costs amortization recognized in 2019.

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Foreign Currency Loss (Gain)

For 2020, foreign currency losses were $0.9 million as compared to foreign currency gains of $0.4 million for 2019. Losses increased by $1.3 million during 2020 due to exchange rate volatility, especially with respect to the euro and Chinese yuan.

Gain on Bargain Purchase

As discussed in the Results of Operations for the Years Ended December 31, 2021 and 2020 section above, we recorded a bargain purchase gain of $5.0 million for the year ended December 31, 2020 as a result of the Alabama Trailers acquisition.

Unrealized (Gain) Loss on Investment in Equity Securities

The unrealized gain on investment in equity securities was $13.1 million in 2020 as compared to the unrealized loss on investment in equity securities of $0.1 million in 2019. Gains increased by $13.2 million primarily due to a $17.0 million unrealized gain on the mark-to-market adjustment of our investment in McPhy (Euronext Paris: MCPHY – ISIN; FR0011742329), partially offset by a $2.9 million unrealized loss on the mark-to-market adjustment of our investment in Stabilis.

Income Tax Expense

Income tax expense of $14.9 million and $2.8 million for the years ended December 31, 2020 and 2019, respectively, represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of 17.5% and 8.1%, respectively. As discussed in the Results of Operations for the Years Ended December 31, 2021 and 2020 section above, the effective income tax rate of 17.5% for the year ended December 31, 2020 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.

The effective income tax rate of 8.1% for the year ended December 31, 2019 differed from the U.S. federal statutory rate of 21% primarily due to tax benefits related to certain share-based compensation, partially 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 from continuing operations attributable to Chart was $68.9 million and $31.4 million for 2020 and 2019, respectively.

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Segment Results for the Years Ended December 31, 2021, 2020 and 2019

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, 2021, 2020 and 2019 (dollars in millions):

Cryo Tank Solutions—Results of Operations for the Years Ended December 31, 2021 and 2020

Cryo Tank Solutions segment sales increased by $31.6 million during 2021 as compared to 2020. As mentioned in the results of operations above, this increase was mainly driven by higher sales in mobile equipment, engineered tanks and storage systems with strong performance in China, India and Germany.

Cryo Tank Solutions segment gross profit decreased by $6.0 million during 2021 as compared to 2020, and gross profit margin decreased by 300 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.

Cryo Tank Solutions SG&A expenses decreased during 2021 as compared to 2020. Furthermore, Cryo Tank Solutions segment SG&A expenses as a percentage of Cryo Tank Solutions segment sales improved by 150 basis points in 2021 as compared to 2020. Cryo Tank Solutions SG&A expenses for the year ended December 31, 2020 include a $2.6 million gain on sale of a facility in China. Additionally, restructuring expenses were $0.3 million in 2021 as compared to $2.3 million in 2020.

Cryo Tank Solutions—Results of Operations for the Years Ended December 31, 2020 and 2019

Cryo Tank Solutions segment sales increased by $5.9 million during 2020 as compared to 2019 primarily due to higher volume in engineered tanks in the U.S. and higher mobile equipment sales in China, partially offset by lower sales in storage equipment in the U.S. mainly driven by business disruptions where certain of our large customers shut down production temporarily due to the Covid-19 pandemic earlier in the year.

Cryo Tank Solutions segment gross profit increased by $22.3 million during 2020 as compared to 2019. This increase in gross profit was mainly attributable to increased volume efficiencies related to our mobile equipment product lines in China and in our VRV business and one-time restructuring costs in China during 2019. The increase in gross profit margin was primarily

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driven by restructuring costs in 2019 and favorable product mix as our Cryo Tank Solutions segment operations in Europe and China gained better leverage on increased volume. This increase was partially offset by unfavorable product mix relative to engineered systems related to our U.S. Cryo Tank Solutions segment operations.

Cryo Tank Solutions segment SG&A expenses decreased during 2020 as compared to 2019 primarily driven by lower employee-related costs as a result of cost reduction actions. Restructuring expenses were $2.3 million in 2020 as compared to $1.1 million in 2019. As previously noted, Cryo Tank Solutions SG&A expenses for the year ended December 31, 2020 include a $2.6 million gain on sale of a facility in China.

Heat Transfer Systems—Results of Operations for the Years Ended December 31, 2021 and 2020

Heat Transfer Systems segment sales decreased by $107.1 million during 2021 as compared to 2020. During 2021, we recognized $20.1 million in sales relative to Calcasieu Pass as compared to $97.7 million in 2020. As mentioned in the results of operations above, we are experiencing industry-wide softness in demand for midstream and upstream compression equipment. However, we continue to see a slight recovery in market conditions as indicated by an increase in customer order activity and inquiry.

Heat Transfer Systems segment gross profit decreased by $58.1 million during 2021 compared to 2020, and gross profit margin decreased by 1,170 basis points driven by lower volume, partially offset by lower restructuring costs. The decrease in Heat Transfer Systems segment gross profit was primarily due to overall product and project volume mix, including Calcasieu Pass, which drove higher gross profit margin in 2020.

Heat Transfer Systems segment SG&A expenses decreased by $8.5 million during 2021 as compared to 2020 mainly due to lower restructuring costs and lower employee-related costs.

Heat Transfer Systems operating income decreased by $23.5 million during 2021 as compared to 2020 due to industry-wide softness in demand for midstream and upstream compression equipment and overall product and project volume mix, including Calcasieu Pass. During 2020, we recorded an impairment loss of $16.0 million to our AXC Intangible Asset.

Heat Transfer Systems—Results of Operations for the Years Ended December 31, 2020 and 2019

Heat Transfer Systems segment sales decreased by $71.9 million during 2020 as compared to 2019 primarily due to an industry-wide softness in demand for midstream and upstream compression equipment. This decrease was partially offset by revenue contributions from the continued execution of our backlog on big LNG, including Venture Global’s Calcasieu Pass LNG export terminal project and other petrochemical applications. As of the beginning of 2020, our previous Cooler Service air cooled heat exchanger facility in Tulsa was closed, and its operations were combined with our AXC operations.

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Heat Transfer Systems segment gross profit decreased by $0.4 million during 2020 as compared to 2019 while gross profit margin increased by 400 basis points. Gross profit as a percentage of sales increased mainly due to mix where Venture Global’s Calcasieu Pass LNG export terminal project drove higher margins.

Heat Transfer Systems segment SG&A expenses decreased by $14.8 million during 2020 as compared to 2019 primarily driven by general reductions across most SG&A categories, especially employee-related costs in light of restructuring actions taken during the period.

Heat Transfer Systems operating income decreased by $6.5 million during 2020 as compared to 2019. As previously mentioned, we recorded an impairment loss of $16.0 million during 2020 relative to our AXC Intangible Asset. Excluding the impact of the impairment loss, operating income increased by $9.5 million.

Specialty Products—Results of Operations for the Years Ended December 31, 2021 and 2020

Specialty Products segment sales increased by $190.3 million ($126.6 million organically) during 2021 as compared to 2020 to a record $432.9 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, HLNG vehicle tanks, water treatment and food & beverage applications, each of which had double digit growth during 2021 as compared to 2020. This increase was bolstered by inorganic additions over the past year. The increase in sales for water treatment equipment sales primarily related to our recent acquisitions of BlueInGreen, LLC and AdEdge.

Specialty Products segment gross profit increased by $61.2 million ($38.9 million organically) during 2021 as compared to 2020 primarily due to higher volume while gross profit margin decreased by 110 basis points. As previously discussed in the results of operations section, the decrease in gross profit margin was mainly driven by higher material prices and higher labor costs due to macroeconomic conditions.

Specialty Products segment SG&A expenses increased by $21.1 million ($13.0 million organically) during 2021 as compared to 2020 primarily driven by ramp up in the business. Furthermore, Specialty Products segment SG&A expenses included $1.1 million relative to acquisition-related contingent consideration adjustments recognized year-to-date during 2021.

Specialty Products—Results of Operations for the Years Ended December 31, 2020 and 2019

Specialty Products segment sales increased by $34.7 million during 2020 as compared to 2019. This increase was primarily driven by favorable sales in hydrogen equipment and HLNG vehicle tanks.

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Specialty Products segment gross profit increased by $12.1 million during 2020 as compared to 2019. This increase in gross profit was mainly attributable to higher HLNG vehicle tanks volume, partially offset by new production line ramp up in Ornago, Italy during 2020. The increase in gross profit margin was primarily driven by favorable product mix and volume as the Specialty Products segment gained better leverage on increased volume, primarily related to hydrogen equipment and HLNG vehicle tanks.

Specialty Products segment SG&A expenses decreased by $0.2 million during 2020 as compared to 2019. As a percentage of sales, Specialty Products segment SG&A expenses was more favorable in 2020 compared to 2019 primarily due to general reductions across most SG&A categories.

Repair, Service & Leasing—Results of Operations for the Years Ended December 31, 2021 and 2020

Repair, Service & Leasing segment sales increased by $28.7 million during 2021 as compared to 2020. Similar to the comments previously mentioned in the results of operations section, the increase was mainly driven by favorable sales in our leasing business, partially offset by a decrease in sales within our full lifecycle services business.

Repair, Service & Leasing segment gross profit decreased by $5.0 million during 2021 as compared to 2020, and gross profit margin decreased by 800 basis points. The decrease in gross profit margin was mainly driven by unfavorable material costs relative to our leasing business and fewer high margin, short-lead time replacement equipment sales in 2021 as compared to 2020.

Repair, Service & Leasing segment SG&A expenses increased by $2.5 million during the year 2021 as compared to 2020. L.A. Turbine SG&A expenses of $2.4 million are included in Repair, Service & Leasing segment results since the July 1, 2021 acquisition date. Excluding L.A. Turbine, SG&A expenses remained relatively flat between years.

Repair, Service & Leasing—Results of Operations for the Years Ended December 31, 2020 and 2019

Repair, Service & Leasing segment sales decreased by $4.3 million during 2020 as compared to 2019, which was primarily driven by lower volume in aftermarket air cooled heat exchangers, partially offset by an increase in high margin, short-lead time replacement equipment and full lifecycle services.

Repair, Service & Leasing segment gross profit increased by $0.6 million during 2020 as compared to 2019, and gross profit margin increased by 130 basis points primarily on lower restructuring costs in 2020 as compared to 2019.

Repair, Service & Leasing segment SG&A expenses decreased by $3.3 million during 2020 as compared to 2019. As a percentage of sales, Repair, Service & Leasing segment SG&A expenses were more favorable in 2020 compared to 2019

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primarily due to general reductions across most SG&A categories, mainly employee-related costs in light of restructuring actions taken during 2019.

Corporate

Corporate SG&A expenses increased by $7.1 million during 2021 as compared to 2020 mainly due to higher share-based compensation expense, information technology costs and legal fees partially offset by lower employee-related costs. Corporate SG&A expenses decreased by $5.0 million during 2020 as compared to 2019 primarily due to lower transaction-related costs.

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, 2021, 2020 and 2019 was $1,190.1 million, $810.0 million and $751.2 million, respectively.

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

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(1)Heat Transfer Systems segment backlog as of December 31, 2020 was inclusive of $21.0 million of backlog remaining on Calcasieu Pass compared to $117.6 million of Calcasieu Pass remaining as of December 31, 2019. Also included in Heat Transfer Systems segment backlog for all periods presented is approximately $40 million related to the previously announced Magnolia LNG order where production release is delayed. As we previously reported, in general, similar projects previously put on hold in the market are beginning to move ahead as the clean energy infrastructure build out ramps up.

Orders and Backlog for the Year Ended and As of December 31, 2021 Compared to the Year Ended and As of December 31, 2020

Cryo Tank Solutions segment orders for 2021 were $555.4 million, a record, as compared to $417.5 million for 2020, an increase of $137.9 million. This increase was driven by record order intake for standard tanks and mobile equipment as a result of higher pre-order activity, especially in the second quarter of 2021, as customers anticipated higher prices in future periods. Cryo Tank Solutions segment backlog totaled $346.8 million as of December 31, 2021, a record high, compared to $222.6 million as of December 31, 2020, an increase of $124.2 million.

Heat Transfer Systems segment orders for 2021 were $312.0 million (net of a $14.4 million change order) compared to $331.1 million for 2020, a decrease of $19.1 million mainly driven by softness in demand for natural gas compression

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equipment. Included in 2020 Heat Transfer Systems segment orders was a $70 million order for a downstream project (100% air cooled heat exchangers). Heat Transfer Systems segment backlog totaled $370.4 million as of December 31, 2021 compared to $329.2 million as of December 31, 2020, an increase of $41.2 million.

Specialty Products segment orders for 2021 were a record $648.6 million ($494.0 million organically) compared to $279.2 million ($277.0 million organically) for 2020, an increase of $369.4 million ($217.0 million organically). This increase was mainly driven by strong orders in hydrogen and helium (liquefaction, distribution and storage), HLNG vehicle tanks, LNG regasification, laser applications and food & beverage applications. During 2021, we recorded four hydrogen/helium liquefaction orders totaling approximately $150 million, covering three different geographies and three different customers. The increase in orders was also attributed to an increase in food & beverage applications and favorable water treatment equipment solutions primarily related to our recent acquisitions of BlueInGreen, LLC and AdEdge. Specialty Products segment backlog totaled a record $438.2 million ($320.4 million organically) as of December 31, 2021, compared to $199.7 million ($191.5 million organically) as of December 31, 2020, an increase of $238.5 million ($128.9 million organically).

Repair, Service & Leasing segment orders for 2021 were $180.6 million compared to $196.8 million for 2020, a decrease of $16.2 million. This decrease was primarily driven by fewer high margin, short-lead time replacement equipment orders in 2021 as compared to 2020 and significant orders for ISO containers for LNG applications received in 2020, partially offset by higher aftermarket fans and air cooled heat exchangers. Furthermore, orders in our leasing and spare parts businesses were fairly consistent between periods. Repair, Service & Leasing segment backlog totaled $56.5 million as of December 31, 2021, compared to $63.1 million as of December 31, 2020, a decrease of $6.6 million.

Orders and Backlog for the Year Ended and As of December 31, 2020 Compared to the Year Ended and As of December 31, 2019

Cryo Tank Solutions segment orders for 2020 were $417.5 million compared to $409.5 million for 2019, an increase of $8.0 million. This increase was primarily driven by solid order intake for mobile equipment in China and India and favorable engineered systems orders in Europe and the U.S. partially offset by unfavorable orders for mobile equipment in Europe and the U.S. During 2020, Covid-19 shut downs softened order intake during the second quarter of 2020, but increased the last half of 2020 as restrictions eased and demand for medical oxygen equipment increased. Cryo Tank Solutions segment backlog totaled $222.6 million as of December 31, 2020, compared to $210.2 million as of December 31, 2019, an increase of $12.4 million.

Heat Transfer Systems segment orders for 2020 were $331.1 million compared to $477.5 million for 2019, a decrease of $146.4 million mainly driven by softness in demand for natural gas compression equipment. Included in 2020 Heat Transfer Systems segment orders was a $70 million order for a downstream project (100% air cooled heat exchangers) as previously discussed. Heat Transfer Systems segment backlog totaled $329.2 million as of December 31, 2020 compared to $357.1 million as of December 31, 2019, a decrease of $27.9 million. Excluding Calcasieu Pass, Heat Transfer Systems backlog increased by $68.7 million or 28.7% in 2020 compared to 2019. Included in Heat Transfer Systems segment backlog for all periods presented is approximately $40.0 million related to the previously announced Magnolia LNG order where production release is delayed.

Specialty Products segment orders for 2020 were $279.2 million compared to $274.9 million for 2019, an increase of $4.3 million. This increase was mainly driven by an increase in HLNG vehicle tank and hydrogen equipment orders. Specialty Products segment backlog totaled $199.7 million as of December 31, 2020, compared to $150.1 million as of December 31, 2019, an increase of $49.6 million.

Repair, Service & Leasing segment orders for 2020 were $196.8 million compared to $166.5 million for 2019, an increase of $30.3 million, which was primarily driven by increases in aftermarket fans, full lifecycle services and our expanded leasing fleet partially offset by a decrease in aftermarket air cooled heat exchangers. Repair, Service & Leasing segment backlog totaled $63.1 million as of December 31, 2020, compared to $33.8 million as of December 31, 2019, an increase of $29.3 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 $122.2 million as of December 31, 2021, a decrease of $2.9 million from the balance at December 31, 2020. Our foreign subsidiaries held cash of approximately $91.2 million and $102.7 million at

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December 31, 2021 and 2020, respectively, to meet their liquidity needs. No material restrictions exist to accessing cash held by our foreign subsidiaries. We expect to meet our U.S. funding needs without repatriating non-U.S. cash and incurring incremental U.S. taxes. 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, 2021 and 2020

Cash used in operating activities during 2021 was $21.3 million, a decrease of $194.0 million from 2020, primarily due to a decrease in operating cash provided by working capital, particularly within inventory, accounts receivable and unbilled contract revenue during 2021. In light of widespread supply chain and cost challenges as discussed in the macroeconomic impacts section above, cash used for inventory was primarily driven by cost and availability of raw materials to ensure that we have sufficient stock to meet demand. We continually evaluate our supply chain and make strategic inventory purchases as appropriate.

Cash used in investing activities during 2021 was $361.2 million, as compared to cash provided by investing activities of $185.0 million during 2020, which includes $316.7 million in cash provided by investing activities of discontinued operations primarily related to net cash proceeds of $317.5 million from the sale of our cryobiological products business in 2020. During 2021, we used $205.1 million of cash for the acquisitions of Cryogenic Gas Technologies, Inc., L.A. Turbine, AdEdge and Earthly Labs, net of cash acquired. We used $103.9 million for investments in Svante Inc., Transform Materials LLC, Cryomotive GmbH, Earthly Labs and an additional investment in HTEC Hydrogen Technology & Energy Corporation (“HTEC”). We also paid $52.7 million for capital expenditures. See below for discussion regarding the composition of cash provided by investing activities during 2020.

Cash provided by financing activities during 2021 was $381.9 million compared to cash used in financing activities of $363.4 million during 2020. During 2021, we borrowed $1,361.1 million on credit facilities and repaid $873.6 million in borrowings on credit facilities primarily to fund the acquisitions and investments described in the paragraph above. Furthermore, during the fourth quarter of 2021, we refinanced our senior secured revolving credit facility which resulted in additional sources of cash of $482.0 million in U.S. dollar borrowings and 78 million euros (equivalent to $90.5 million) in euro borrowings. These sources of cash repaid principal and interest outstanding under our senior secured revolving credit facility prior to the amendment ($478.7 million in U.S. dollar borrowings and 78 million euros (equivalent to $90.5 million) in euro borrowings) plus upfront debt issuance costs. Total debt issuance costs paid during 2021 were $3.0 million. For further discussion regarding the amendment of our credit facilities, refer to 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. Also during 2021, we received $6.9 million in proceeds from stock option exercises and paid $6.4 million for common stock repurchases from share-based compensation plans to satisfy tax withholding obligations relating to the vesting or payment of equity awards. See below for discussion regarding the composition of cash provided by financing activities during 2020.

Years Ended December 31, 2020 and 2019

Cash provided by operating activities during 2020 was $172.7 million and includes $18.3 million in cash provided by operating activities of discontinued operations, an increase of $38.8 million from 2019, mainly due to favorable operating results, partially offset by an increase in cash used for working capital, primarily due to higher inventory levels.

Cash provided by investing activities during 2020 was $185.0 million and includes $316.7 million in cash provided by investing activities of discontinued operations, as compared to cash used in investing activities of $642.7 million during 2019, which includes $0.9 million in cash used in investing activities of discontinued operations. During 2020, we received net cash proceeds of $317.5 million from the sale of our cryobiological products business. We used $51.9 million of cash primarily for the acquisitions of Sustainable Energy Solutions, Inc. ($20.0 million) BlueInGreen, LLC ($20.0 million) and Alabama Trailers ($10.0 million), $50.8 million in investments in HTEC Hydrogen Technology & Energy Corporation (“HTEC”) and McPhy (Euronext Paris: MCPHY – ISIN; FR0011742329) and paid $37.9 million for capital expenditures. During 2019, we used $603.9 million of cash primarily for the acquisition of AXC and paid $36.2 million for capital expenditures.

Cash used in financing activities during 2020 was $363.4 million compared to cash provided by financing activities of $511.6 million during 2019. During 2020, we borrowed $215.0 million on credit facilities and repaid $223.1 million in borrowings on credit facilities. We repaid $344.1 million in borrowings on our term loan due June 2024 mainly with proceeds

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from the divestiture of our cryobiological products business. We used $19.3 million to repurchase shares of Chart common stock related to our share purchase program during 2020 (On March 11, 2021, the share repurchase program expired with no further repurchases). We received $11.0 million in proceeds from stock option exercises during 2020. During 2019, we borrowed $450.0 million under the term loan and received proceeds of $295.8 million from the 2019 Equity Offering to fund the AXC acquisition. During 2019, we borrowed $235.8 million on our senior secured revolving credit facility to fund working capital needs and to fund a portion of the AXC acquisition and repaid $451.1 million in senior secured revolving credit facility borrowings. Also during 2019, we received $9.4 million in proceeds from stock option exercises and used $2.0 million for common stock repurchases from share-based compensation plans to satisfy tax withholding obligations relating to the vesting or payment of equity awards.

Cash Requirements

We do not currently anticipate any unusual cash requirements for working capital needs for the year ending December 31, 2022. 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 2022 to be in the range of $50.0 million to $55.0 million.

Contractual Obligations

Our known contractual obligations as of December 31, 2021 and cash requirements resulting from those obligations are as follows (all dollar amounts in millions):

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(1)The $258.8 principal balance of the 2024 Notes will mature on November 15, 2024, yet the carrying amount of the 2024 Notes is treated as current for financial statement reporting purposes.

Not included in the table above is a 50.0 million euros investment commitment for the Clean H2 Infra Fund as mentioned in Note 6, “Investments.” 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. Also not included in the table above are contingent consideration arrangements from prior acquisitions with a potential payout range of $0.0 million to $31.0 million.

Our commercial commitments as of December 31, 2021, 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 (all dollar amounts in millions):

Inventories, net

Our inventories, net, balance was $321.5 million at December 31, 2021 compared to $248.4 million at December 31, 2020, representing an increase of $73.1 million (29.4%). This increase was primarily driven by cost and availability of raw materials to ensure that we have sufficient stock to meet demand. As discussed in the sources and uses of cash section above, we continually evaluate our supply chain and make strategic inventory purchases as appropriate.

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Accrued Income Taxes

Our accrued income taxes balance was $16.1 million at December 31, 2021 compared to $46.5 million at December 31, 2020, representing a decrease of $30.4 million (65.4)%. This decrease was primarily driven by $24.9 million in payments for income taxes related to the gain recognized on the cryobiological products divestiture.

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

During 2021, we had operations in Asia, Australia, India, Europe, and South America, which accounted for approximately 56% of consolidated sales and 24% of total assets at December 31, 2021. Functional currencies used by these operations include the U.S. dollar, Chinese yuan, the euro, the British pound, the Japanese yen and the Indian rupee. 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. 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 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.

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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, 2021 and 2020 (“annual 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 assessment date and, therefore, no further action was necessary. Furthermore, as of the annual assessment dates, we also elected to bypass the qualitative assessment for indefinite-lived intangible assets with the exception of our recently acquired trade names as of October 1, 2021 which includes Cryo Technologies, L.A. Turbine and AdEdge (together, the “recently acquired trade names”). Based on our qualitative assessment of the recently acquired trade names, we determined that it is not “more likely than not” that the fair value of each of the recently acquired trade names is less than its respective carrying amount. With one exception as discussed in the next paragraph, based on our quantitative assessments of all other trade names, we determined that the fair value of each of the indefinite-lived intangible assets was greater than its respective carrying value at each annual assessment date and, therefore, no further action was necessary.

During 2020, in connection with the annual impairment process described above, Chart, with the assistance of an outside professional accounting firm, performed an impairment analysis with respect to our AXC Intangible Asset. Our preliminary analysis determined that no impairment was required for the AXC Intangible Asset, partially as a result of the inclusion of carbon capture future revenue streams in our forecast. After further analysis, we determined that these carbon capture opportunities should not have been included in our forecast as they resulted from investments and activities that occurred in the business after October 1, 2020, the appropriate measurement date. As a result of removing this revenue from the forecast, we recorded an impairment loss of $16.0 million during 2020 relative to our $55.0 million AXC Intangible Asset in our Heat Transfer Systems segment. Industry-wide softness in demand for midstream and upstream compression equipment represented

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impairment indicators requiring us to re-evaluate the fair value of the AXC Intangible Asset. We determined the fair value of the AXC Intangible Asset under the relief-from-royalty method and conducted an impairment test as defined above. We determined that the fair value of the AXC Intangible Asset was $39.0 million and impaired the AXC Intangible Asset by a value equal to the difference in the carrying amount and calculated fair value.

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 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.

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,

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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.

For brazed aluminum heat exchangers, air cooled heat exchangers, cold boxes, liquefied natural gas fueling stations, engineered tanks, and repair services, contracts contain language that transfers control to the customer over time. 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.

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

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regarding revenues, cost synergies and efficiency savings, objectives, future orders, margins, segment sales mix, earnings or performance, liquidity and cash flow, inventory levels, capital expenditures, materials costs and pricing increases, business trends, clean energy market opportunities, governmental initiatives, including 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, 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 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.

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