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What changed in CHART INDUSTRIES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CHART INDUSTRIES INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+364 added−411 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-24)

Top changes in CHART INDUSTRIES INC's 2023 10-K

364 paragraphs added · 411 removed · 283 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

53 edited+9 added−8 removed58 unchanged
Biggest changeWith 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. Our primary customers are large, multinational producers and distributors of hydrocarbon and industrial gases and their end-users.
Biggest changeChart is committed to excellence in environmental, social and corporate governance (“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 and South America, we maintain accountability and transparency to our team members, suppliers, customers and communities.
Our cold boxes are highly engineered 4 systems that incorporate brazed aluminum heat exchangers, pressure vessels, and interconnecting piping used to significantly reduce the temperature of gas mixtures to liquefy component gases so that they can be separated and purified for further use in multiple energy, industrial, scientific, and commercial applications.
Our cold boxes are highly engineered systems that incorporate brazed aluminum heat exchangers, pressure vessels, and interconnecting piping used to significantly reduce the temperature of gas mixtures to liquefy component gases so that they can be separated and purified for further use in 4 multiple energy, industrial, scientific, and commercial applications.
These regulations impose limitations on the discharge of pollutants into the soil, air, and water and establish standards for their handling, management, use, storage, and disposal. We are involved with environmental compliance, investigation, monitoring, and remediation activities at certain of our owned or formerly owned manufacturing facilities and at one owned facility that is leased to a third party.
These regulations impose limitations on the discharge of pollutants into the soil, air, and water and establish standards for their handling, management, use, storage, and disposal. 9 We are involved with environmental compliance, investigation, monitoring, and remediation activities at certain of our owned or formerly owned manufacturing facilities and at one owned facility that is leased to a third party.
We have achieved this competitive position by capitalizing on our technical expertise, broad product and service offering, reputation for a high quality global manufacturing footprint, and by focusing on attractive, growth markets. We have an established sales and customer support presence across the globe with manufacturing operations in the United States, Asia, India and Europe.
We have achieved this competitive position by capitalizing on our technical expertise, broad product and service offering, reputation for a high quality global manufacturing footprint, and by focusing on attractive, growth markets. We have an established sales and customer support presence across the globe with manufacturing operations in the United States, Asia, India, Africa and Europe.
We have made a number of acquisitions over the past three years to capitalize on clean power, clean industrials, clean water and clean food, beverages and agriculture market opportunities within this segment. These include the acquisitions of BlueInGreen, LLC, Sustainable Energy Solutions, Inc., Cryogenic Gas Technologies, Inc., L.A. Turbine, AdEdge Holdings, LLC and Earthly Labs Inc.
We have made a number of acquisitions over the past three years to capitalize on clean power, clean industrials, clean water and clean food, beverages and agriculture market opportunities within this segment. These include the acquisitions of Howden, BlueInGreen, LLC, Sustainable Energy Solutions, Inc., Cryogenic Gas Technologies, Inc., L.A. Turbine, AdEdge Holdings, LLC and Earthly Labs Inc.
More specifically, our horizontal LNG vehicle tanks are widely used onboard heavy-duty trucks and buses while our recently-released liquid hydrogen vehicle tank enjoys many of the same characteristics. Chart also manufactures specialized cryogenic railcars used to transport not only LNG, but a number of other gaseous and liquid 5 molecules.
More specifically, our horizontal LNG vehicle tanks are widely used onboard heavy-duty trucks and buses while our recently-released liquid hydrogen vehicle tank enjoys many of the same characteristics. Chart also manufactures specialized cryogenic railcars used to transport not only LNG, but a number of other gaseous and liquid molecules.
Other examples of Chart employee development programs include our Emerging Leaders program, Welding Council, Rotational Engineering program and Engineering Fellows and Key Experts program, in addition to the aforementioned Global Safety Council. Chart’s Emerging Leaders accelerated development program assigns immersive, high-impact projects to high-potential employees across the organization to prepare them for advancement to executive roles.
Other examples of Chart employee development programs include our Emerging Leaders program, Welding Council, Rotational Engineering program, Engineering Fellows, Key Experts program, and Operations Leaders Program, in addition to the aforementioned Global Safety Council. Chart’s Emerging Leaders accelerated development program assigns immersive, high-impact projects to high-potential employees across the organization to prepare them for advancement to executive roles.
Demand for industrial gas applications is driven primarily by the significant installed base of users of cryogenic liquids, as well as new applications and distribution technologies for cryogenic liquids. Our competitors tend to be regionally focused while we supply a broad range of systems on a worldwide basis.
Demand for industrial gas applications is driven primarily by the significant installed base of users of molecules, as well as new applications and distribution technologies for cryogenic liquids. Our competitors tend to be regionally focused while we supply a broad range of systems on a worldwide basis.
Our operations have historically included and currently include the handling and use of hazardous and other regulated substances, such as various cleaning fluids used to remove grease from metal that are subject to federal, state, local, 9 and foreign environmental laws and regulations.
Our operations have historically included and currently include the handling and use of hazardous and other regulated substances, such as various cleaning fluids used to remove grease from metal that are subject to federal, state, local, and foreign environmental laws and regulations.
Additionally, we design and manufacture nitrogen dosing products and other equipment used in packaging as well as the food and beverage industry. These applications include processing, preservation and beverage carbonation. Our water treatment technology is also offered through the Specialty Products segment.
Additionally, we design and manufacture nitrogen dosing products and other equipment used in packaging as well as the food and beverage industry. These applications include processing, preservation and beverage carbonation. 5 Our water treatment technology is also offered through the Specialty Products segment.
Additionally, we offer a variety of leasing options on certain types of Chart equipment, providing our customers with the flexibility to quickly respond to seasonal or sudden increases in demand with similar flexibility when existing equipment is being repaired or refurbished.
Additionally, we offer a variety of leasing options on certain types of Chart equipment, providing our customers with the flexibility to quickly respond to seasonal or sudden increases in demand with similar flexibility when existing equipment is 6 being repaired or refurbished.
Actual costs incurred may vary from these estimates due to the inherent uncertainties involved. Future expenditures relating to these environmental remediation efforts are expected to be made over the coming years as ongoing costs of remediation programs. We do not believe that these regulatory requirements have had a material effect upon our capital expenditures, earnings, or competitive position.
Actual costs incurred may vary from these estimates due to the inherent uncertainties involved. Future expenditures relating to these environmental remediation efforts are expected to be made over the coming years as ongoing costs of remediation programs. We do not believe that these regulatory requirements have had a material effect on our capital expenditures, earnings, or competitive position.
Commodity components of our raw material (aluminum, stainless steel and carbon steel) could experience additional levels of volatility during 2023 and may have a relational impact on raw material pricing. Subject to certain short-term risks related to our suppliers as discussed under Item 1A.
Commodity components of our raw material (aluminum, stainless steel and carbon steel) could experience additional levels of volatility during 2024 and may have a relational impact on raw material pricing. Subject to certain short-term risks related to our suppliers as discussed under Item 1A.
Most raw materials are available from multiple sources of supply, although shortages and delays to certain materials have been experienced during the past year, as a result of market disruptions caused by macroeconomic conditions such as inflation and supply chain disruptions. We have long-term relationships with our raw material suppliers and other vendors.
Most raw materials are available from multiple sources of supply, although shortages and delays to certain materials have been experienced during the past three years, as a result of market disruptions caused by macroeconomic conditions such as inflation and supply chain disruptions. We have long-term relationships with our raw material suppliers and other vendors.
Our expanded solution set effectively addresses a wide range of organic and inorganic contaminants including arsenic and per- and polyfluorinated alkylated substances (PFAS), often referred to as “forever chemicals.” Other equipment and technology offered through Specialty Products have applications in CO2 Capture, space and cannabis industries.
Our expanded solution set effectively addresses a wide range of organic and inorganic contaminants including arsenic and per- and polyfluorinated alkylated substances (PFAS), often referred to as “forever chemicals.” Other equipment and technology offered through Specialty Products have applications in carbon capture and space industries.
Serving both municipal and industrial end markets globally, our water treatment process technology utilizes Chart’s cryogenic storage and vaporization equipment to efficiently deliver dissolved oxygen, CO2 and ozone into water. Our technology is used for oxygenation, pH adjustment, oxidation and odor control with modular and mobile solution options.
Serving both municipal and industrial end markets globally, our water treatment process technology utilizes Chart’s cryogenic storage and vaporization equipment to efficiently deliver dissolved oxygen, carbon dioxide and ozone into water. Our technology is used for oxygenation, pH adjustment, oxidation and odor control with modular and mobile solution options.
We also offer cryogenic components, including turboexpanders, vacuum insulated pipe (“VIP”), specialty liquid nitrogen, or LN2, end-use equipment and cryogenic flow meters. We design and manufacture solutions for the liquefaction, storage, distribution, regasification and use of hydrogen. We have over 57 years of experience in manufacturing hydrogen-related equipment.
We also offer cryogenic components, including turboexpanders, vacuum insulated pipe (“VIP”), specialty liquid nitrogen, or LN2, end-use equipment and cryogenic flow meters. We design and manufacture solutions for the liquefaction, storage, distribution, regasification and use of hydrogen as both a liquid and a gas. We have over 57 years of experience in manufacturing hydrogen-related equipment.
Our Chief Executive Officer and President, Jillian Evanko, has also signed the CEO Action for Diversity & Inclusion™ pledge, and our Global Diversity & Inclusion Committee is working with our 5,178 team members to ensure all of our key themes and priorities work seamlessly together in our culture for the best employee experience.
Our Chief Executive Officer and President, Jillian Evanko, has also signed the CEO Action for Diversity & Inclusion™ pledge, and our Global Diversity & Inclusion Committee is working with our 11,637 team members to ensure all of our key themes and priorities work seamlessly together in our culture for the best employee experience.
We are not anticipating any material capital expenditures in 2023 relating to our existing business that are directly related to regulatory compliance matters.
We are not anticipating any material capital expenditures in 2024 relating to our existing business that are directly related to regulatory compliance matters.
Cryo Tank Solutions Cryo Tank Solutions (31% of consolidated sales for the year ended December 31, 2022) designs and manufactures cryogenic solutions for the storage and delivery of cryogenic liquids used in industrial gas and LNG applications. With operations in the United States, Latin America, Europe and Asia, our Cryo Tank Solutions segment serves customers globally.
Cryo Tank Solutions Cryo Tank Solutions (19.0% of consolidated sales for the year ended December 31, 2023) designs and manufactures cryogenic solutions for the storage and delivery of cryogenic liquids used in industrial gas and LNG applications. With operations in the United States, Latin America, Europe and Asia, our Cryo Tank Solutions segment serves customers globally.
We strive to maintain an inclusive environment free from discrimination of any kind, including sexual or other discriminatory harassment. All employees are expected to put into practice our Code of Ethics, related policies, laws, rules and regulations in all countries where we operate.
We strive to maintain an inclusive environment free from discrimination of any kind, including sexual or other discriminatory harassment. All employees are expected to follow our Code of Ethics, related policies, laws, rules and regulations in all countries where we operate.
Sales to our top ten customers accounted for 38%, 39%, and 42% of consolidated sales in 2022, 2021 and 2020, respectively. Our sales to particular customers fluctuate from period to period, but the global producers and distributors of hydrocarbon and industrial gases as well as their suppliers tend to be a consistently large source of revenue for us.
Sales to our top ten customers accounted for 25%, 38%, and 39% of consolidated sales in 2023, 2022 and 2021, respectively. 7 Our sales to particular customers fluctuate from period to period, but the global producers and distributors of hydrocarbon and industrial gases as well as their suppliers tend to be a consistently large source of revenue for us.
Repair, Service & Leasing Our Repair, Service & Leasing segment (12% of consolidated sales for the year ended December 31, 2022) provides installation, service, repair, maintenance, and refurbishment of our products globally in addition to providing equipment leasing solutions. With primary operations in the United States and Europe, our Repair, Service & Leasing segment serves customers globally.
Repair, Service & Leasing Our Repair, Service & Leasing segment (30.4% of consolidated sales for the year ended December 31, 2023) provides installation, service, repair, maintenance, and refurbishment of our products globally in addition to providing equipment leasing solutions. With primary operations in the United States and Europe, our Repair, Service & Leasing segment serves customers globally.
Engineering and Product Development Our engineering and product development activities are focused primarily on developing new and improved solutions and equipment for the users of cryogenic liquids, hydrocarbons and industrial gases across all industries served. Our engineering, technical, and marketing employees actively assist customers in specifying their needs and in determining appropriate products to meet those needs.
Engineering and Product Development Our engineering and product development activities are focused primarily on developing new and improved technologies, solutions and equipment for the users of molecules, hydrocarbons and industrial gases across all industries served. Our engineering, technical, and commercial employees actively assist customers in specifying their needs and in determining appropriate products to meet those needs.
We supply a wide range of solutions used in the production, storage, distribution and end-use of hydrogen while also providing highly-specialized mobility and transportation equipment for use with both hydrogen and LNG, including onboard vehicle tanks and fueling stations.
We supply a wide range of solutions used in the production, storage, distribution and end-use of hydrogen, including liquefaction technology and equipment and compression equipment. We also provide highly-specialized mobility and transportation equipment for use with both hydrogen and LNG, including onboard vehicle tanks and fueling stations.
Chart prioritizes several measures and objectives in managing its human capital assets, including, among others, employee safety and wellness, talent acquisition and retention, employee engagement, development, and training, diversity and inclusion, and compensation and pay equity. In 2022, we did not experience any employee-generated work stoppages or disruptions, and we consider our employee relations to be satisfactory.
Chart prioritizes several measures and objectives in managing its human capital assets, including, among others, employee safety and wellness, talent acquisition and retention, employee engagement, development, and training, diversity and inclusion, and compensation and pay equity. In 2023, we did not experience any employee-generated work stoppages or disruptions.
We believe our relationships with our customers are generally good. 7 Intellectual Property Although we have a number of patents, trademarks, and licenses related to our business, no one of them or related group of them is considered by us to be of such importance that its expiration or termination would have a material adverse effect on our business.
Intellectual Property Although we have a number of patents, trademarks, and licenses related to our business, no one of them or related group of them is considered by us to be of such importance that its expiration or termination would have a material adverse effect on our business.
The combination of Chart and Howden is complimentary and furthers our global leadership position in highly engineered process technologies and products serving the Nexus of Clean TM – clean power, clean water, clean food and clean industrials. As discussed in Item 3.
The combination of Chart and Howden is complementary and furthers our global leadership position in highly engineered process technologies and products serving the Nexus of Clean TM – clean power, clean water, clean food and clean industrials.
Heat Transfer Systems Heat Transfer Systems (29% of consolidated sales for the year ended December 31, 2022) facilitates major natural gas, petrochemical processing, petroleum refining, power generation and industrial gas companies in the production or processing of their products. With primary manufacturing capabilities in the U.S. and Europe, Heat Transfer Systems serves customers globally.
Heat Transfer Systems Heat Transfer Systems (26.4% of consolidated sales for the year ended December 31, 2023) facilitates major natural gas, petrochemical processing, petroleum refining, power generation and industrial gas companies in the production or processing of their products. With primary manufacturing capabilities in the United States and Europe, Heat Transfer Systems serves customers globally.
Our well-established relationships extend to truck manufacturers in addition to those in other clean energy industries such as biofuels, hydrogen and CO2 capture. Our customers include: Linde, Air Liquide, IVECO, Air Products, Shell, Chevron, ExxonMobil, Chick-fil-A, New Fortress Energy, Samsung, United Launch Alliance, and Blue Origin, some of whom have been purchasing our products for over 30 years.
Our well-established relationships extend to truck manufacturers in addition to those in other clean energy industries such as biofuels, hydrogen, water and carbon capture. Our customers include: Linde, Air Liquide, Air Products, ExxonMobil, Baker Hughes, Wison, Kathairos, Chick-fil-A, Samsung, United Launch Alliance, and Blue Origin, some of whom have been purchasing our products for over 30 years.
Specialty Products Specialty Products (28% of consolidated sales for the year ended December 31, 2022) supplies highly-engineered equipment and process technologies used in specialty end-market applications for hydrogen, LNG, biofuels, CO2 Capture, food and beverage, aerospace, lasers, cannabis and water treatment, among others. Leveraging our global manufacturing presence Specialty Products serves customers globally.
Specialty Products Specialty Products (24.2% of consolidated sales for the year ended December 31, 2023) supplies highly-engineered equipment and process technologies used in specialty end-market applications for hydrogen, LNG, biofuels, carbon capture, food and beverage, aerospace, space exploration, lasers, helium and water treatment, among others. Leveraging our global manufacturing presence, Specialty Products serves customers globally.
We are party to one collective bargaining agreement with the International Association of Machinists and Aerospace Workers (“IAM”) covering 279 employees at our La Crosse, Wisconsin heat exchanger facility. Effective February 8, 2021, we entered into a five-year agreement with the IAM which expires on February 8, 2026. Chart is committed to attracting and retaining the best talent.
We are party to one collective bargaining agreement with the International Association of Machinists and Aerospace Workers (“IAM”) covering 350 employees at our La Crosse, Wisconsin heat exchanger facility. Effective February 7, 2021, we entered into a five-year agreement with the IAM which expires on February 6, 2026.
Our Network of Women employee resource group was started to help create a more equitable workplace and offer career advancement opportunities for women across Chart. Chart has partnered with Historically Black Colleges and Universities (HBCUs) to drive a more diverse and inclusive workforce.
We have several employee resource groups including our Network of Women and Chart Pride, which were started to help create a more equitable workplace and offer career advancement opportunities across Chart. Chart has also partnered with Historically Black Colleges and Universities (HBCUs) to drive a more diverse and inclusive workforce.
“Risk Factors,” we foresee no acute shortages of any raw materials that would have a material adverse effect on our operations. Human Capital Resources As of January 31, 2023, we had 5,178 employees, including 2,790 domestic employees and 2,388 international employees.
“Risk Factors,” we foresee no acute shortages of any raw materials that would have a material adverse effect on our operations. Human Capital Resources As of January 31, 2024, we had 11,637 employees, including 3,717 domestic employees and 7,920 international employees.
We offer short and long-term operating leases as well as lease to own options with up to a ten-year term. Typical equipment we offer with leasing options are standard trailers, bulk and micro bulk storage systems, vaporizers and delivery tankers.
We offer short and long-term operating leases as well as lease to own options with up to a ten-year term. Typical equipment we offer with leasing options are standard trailers, bulk and micro bulk storage systems, vaporizers and delivery tankers. Chart also offers Treatment-as-a-Service options for water treatment customers in addition to remote monitoring services.
We expect to close on the Acquisition within the next 45 days. Howden, headquartered in the U.K., is a leading global provider of mission critical air and gas handling products providing service and support to customers around the world in highly diversified end markets and geographies.
Howden, headquartered in the United Kingdom, is a leading global provider of mission critical air and gas handling products providing service and support to customers around the world in highly diversified end markets and geographies.
We sell our products and services to more than 2,500 customers worldwide, having developed long-standing relationships with leading companies in the gas production, distribution and processing industries as well as those involved in liquefied natural gas (LNG), chemicals and industrial gasses.
Our primary customers are large, multinational producers and distributors of hydrocarbon, hydrogen and industrial gases and their end-users. We sell our products and services to more than 7,000 customers worldwide, having developed long-standing relationships with leading companies in the gas production, distribution and processing industries as well as those involved in liquefied natural gas (LNG), chemicals and industrial gases.
Our key human capital measures include employee safety, turnover, absenteeism and production. We frequently benchmark our compensation practices and benefits programs against those of comparable industries and in the geographic areas where our facilities are located. We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled and unskilled labor throughout our organization.
Our key human capital measures include employee safety, turnover, absenteeism, recruitment and productivity. We frequently benchmark our compensation practices and benefits programs against those of comparable industries and in the geographic areas where our facilities are located.
Business THE COMPANY Overview Chart Industries, Inc., a Delaware corporation incorporated in 1992 (the “Company,” “Chart,” “we,” “us,” or “our” as used herein refers to Chart Industries, Inc. and our consolidated subsidiaries, unless the context indicates otherwise), is a leading independent global manufacturer of highly engineered cryogenic equipment servicing multiple applications in the industrial gas and clean energy markets.
Business THE COMPANY Overview Chart Industries, Inc., a Delaware corporation incorporated in 1992 (the “Company,” “Chart,” “we,” “us,” or “our” as used herein refers to Chart Industries, Inc. and our consolidated subsidiaries, unless the context indicates otherwise), is an 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 notable health, welfare and retirement benefits include company-subsidized health insurance, 401(k) plan with company matching contributions, tuition assistance program and paid time off.
We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled and unskilled labor throughout our organization. Our notable health, welfare and retirement benefits include company-subsidized health insurance, 401(k) plan with company matching contributions, tuition assistance program and paid time off.
We have made a number of acquisitions over the years to expand our global footprint including CSC Cryogenic Service Center AB, Skaff, LLC and VCT Vogel GmbH. To support the products and solutions we sell, our Repair, Service & Leasing segment offers services through the entire lifecycle of our products, which is unique and unparalleled in the markets we serve.
We have made a number of acquisitions over the years to expand our global footprint including Howden, CSC Cryogenic Service Center AB, Skaff, LLC and VCT Vogel GmbH.
We encourage and support the growth and development of our employees and, wherever possible, seek to fill positions by promotion and transfer from within the organization. We advance continual learning and career development through ongoing performance and development conversations or evaluations with employees, internally and externally developed training programs, and educational reimbursement programs.
We advance continual learning and career development through ongoing performance and development conversations or evaluations with employees, internally and externally developed training programs, and educational reimbursement programs.
We also manufacture various types of heat exchangers for hydrogen applications including brazed aluminum, air-cooled and shell & tube varieties. Demand for many of our specialty applications including hydrogen is primarily driven by the global, public and private sector movement towards a lower-carbon footprint, reduced greenhouse gas emissions and overall sustainability trends.
Demand for many of our specialty applications including hydrogen is primarily driven by the global, public and private sector movement towards a lower-carbon footprint, reduced greenhouse gas emissions and overall sustainability trends. These efforts are being guided not only by government policies and related global climate goals, but also by social and environmental actions by various stakeholders.
Chart also offers Treatment-as-a-Service options for water treatment customers in addition to remote monitoring services. 6 Demand for services provided by this segment is being driven by our substantial existing and growing install base, exceptional reputation for high-quality service, breadth of services offered and expanded geographic footprint.
When the data is analyzed, it provides a unique foundation for maintaining and enhancing operational excellence. Demand for services provided by this segment is being driven by our substantial existing and growing install base, exceptional reputation for high-quality service, breadth of services offered and expanded geographic footprint.
These efforts are being guided not only by government policies and related global climate goals, but also by social and environmental actions by various stakeholders. Management believes hydrogen in particular will play an ever-increasing role in the energy transition, given its zero emission characteristics and naturally abundant supply.
Management believes hydrogen in particular will play an ever-increasing role in the energy transition, given its zero emission characteristics and naturally abundant supply.
Our Global Safety Council meets monthly to discuss accidents, injuries, near misses, trends and lessons learned. Council members or executive management present metrics and other safety information at every executive staff and Board of Directors meeting. The cross-functional Global Safety Council is dedicated to reaching our target of zero accidents.
Council members or executive management present metrics and other safety information at every executive staff and Board of Directors meeting. The cross-functional Global Safety Council is dedicated to reaching our target of zero accidents. All Chart employees have Stop Work Authority and are expected to use it if there is concern that any task or procedure could be unsafe.
All Chart sites implement our Occupational Health and Safety Program Requirements for training, reporting, accident investigation, auditing, implementation, and compliance. The policy encourages employee involvement, a crucial element of a successful safety program, by requiring each site to create a safety committee and safety suggestion program.
The policy encourages employee involvement, a crucial element of a successful safety program, by requiring each site to create a safety committee and safety suggestion program. Employee Engagement, Development and Training Chart strives to recruit, hire, develop and promote a diverse workforce.
All prior period amounts 3 presented have been reclassified based on our current reportable segments. Further information about these segments is located in 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.
Our Repair, Service & Leasing segment provides installation, service, repair, maintenance, and refurbishment of products globally in addition to providing equipment leasing solutions as well as expanded aftermarket products, services and service locations related to the Howden Acquisition. 3 Further information about these segments is located in 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.
Covid-19 and Employee Safety and Wellness During the coronavirus (Covid-19) pandemic and as always, the safety and well-being of our employees and their families has been a top priority as we continue to serve our customers, many of which are directly involved in essential manufacturing and critical medical care.
Employee Safety and Wellness The safety and well-being of our employees and their families has been a top priority as we continue to serve our customers. Chart has ongoing communications about safety performance at all levels of the organization.
Operating globally, our Specialty Products segment supplies products used in specialty end-market applications including hydrogen, LNG, biofuels, CO2 Capture, food and beverage, aerospace, lasers, cannabis and water treatment, among others. Our Repair, Service & Leasing segment provides installation, service, repair, maintenance, and refurbishment of cryogenic products globally in addition to providing equipment leasing solutions.
Operating globally, our Specialty Products segment supplies products used in specialty end-market applications including hydrogen, LNG, biofuels, carbon capture, food and beverage, aerospace, lasers and water treatment, among others. Our Heat Transfer Systems, Specialty Products and Cryo Tank Solutions segments also include products from the Howden Acquisition such as compressors, blowers and fans, rotary heaters and steam turbines.
Employee Engagement, Development and Training Chart strives to recruit, hire, develop and promote a diverse workforce. It is our goal to provide each employee a challenging and rewarding experience that allows for personal and professional development.
It is our goal to provide each employee a challenging and rewarding experience that allows for personal and professional development. We encourage and support the growth and development of our employees and, wherever possible, seek to fill positions by promotion and transfer from within the organization.
All Chart employees have Stop Work Authority and are expected to use it if there is concern that any task or procedure could be unsafe. Each site recognizes and rewards employees based on local and global objectives such as achieving safety performance milestones and completing regular audits.
Each site recognizes and rewards employees based on local and global objectives such as achieving safety performance milestones and completing regular audits. All Chart sites implement our Occupational Health and Safety Program Requirements for training, reporting, accident investigation, auditing, implementation, and compliance.
For the years ended December 31, 2022, 2021 and 2020, we generated sales of $1,612.4 million, $1,317.7 million, and $1,177.1 million, respectively. On November 9, 2022 we announced that we signed a definitive agreement to acquire Howden from KPS Capital Partners (the “Acquisition”). Howden is a leading global provider of mission critical air and gas handling products and services.
For the years ended December 31, 2023, 2022 and 2021, we generated sales of $3.4 billion, $1.6 billion, and $1.3 billion, respectively. On March 17, 2023, we completed the acquisition of Howden (“Howden”) from affiliates of KPS Capital Partners (the “Acquisition”). The acquisition purchase price was $4.4 billion.
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We provide product and technology solutions to advance clean power, clean water, clean food and clean industrials in our unique offering for the Nexus of Clean TM . Our unique product portfolio is used in every phase of the liquid gas supply chain including upfront engineering, service and repair.
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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 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.
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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.
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We financed the purchase price for the Howden Acquisition with proceeds from borrowings under our senior secured revolving credit facility and term loans due March 2030, common and preferred stock issuance and a private offering of secured notes and unsecured notes.
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Legal Proceedings, the Company has reached a settlement agreement related to the global plaintiff’s Pacific Fertility Clinic lawsuits and has recognized the impact in discontinued operations in connection with these settlements.
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We also manufacture various types of heat exchangers for hydrogen applications including brazed aluminum, air cooled and shell & tube varieties. Howden Ventsim™ DESIGN is the world's bestselling mine ventilation software, used and trusted by over 2,500 mines, universities, consultants, government and research organizations.
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Our global pandemic efforts have included leveraging the advice and recommendations of infectious disease experts and recognized organizations to establish appropriate safety standards and secure appropriate levels of personal protective equipment for our workforce.
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Ventsim™ DESIGN is a complete integrated mine and tunnel ventilation software package for the design and testing of ventilation circuits including airflow, pressure, heat, gases, power, radon, fire and many other types of ventilation information.
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Based upon these recommendations, we have adopted and implemented a Covid-19 Response Plan to outline our company policies and procedures designed to mitigate the potential for transmission of Covid-19 and its variants and prevent exposure to illness from certain other infectious diseases.
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Ventsim™ CONTROL utilizes intelligent software connected to hardware devices to remotely monitor, control and automate airflow, heating and cooling to deliver safer, more productive and lower cost ventilation for mines.
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These protocols, which remain in place, meet or exceed the Centers for Disease Control guidelines and where applicable, state and local government mandates. Our employees were trained on these protocols and on an ongoing basis, receive regular updates as rules and guidelines evolve, and as recommended responses to the pandemic have also been modified.
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To support the products and solutions we sell, our Repair, Service & Leasing segment offers services through the entire lifecycle of our products, which is unique and unparalleled in the markets we serve.
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Among other things, Chart’s Covid-19 Response Plan details employee, manager, and company responsibilities related to house-keeping and sanitization, hygiene and respiratory etiquette, use of personal protective equipment, employee and visitor screening procedures, leave policies and accommodations, travel guidelines, remote working opportunities and infrastructure, and protocols for not reporting to work and/or when to return to work upon potential and/or confirmed Covid-19 exposure or 8 infection.
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The Howden Acquisition expanded our offerings in the areas of spare parts, retrofits, service and software. Howden Uptime is a digital platform that seamlessly integrates data related to rotating equipment’s performance. The system combines active inputs, such as temperature, pressure and vibration, with reference parameters from manuals, specifications and maintenance reports.
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In addition to procuring and maintaining personal protective equipment, screening stations and other preventative resources, we also leveraged our technology and human capital to accommodate the heightened level of demand for critical care equipment required by customers around the world to fight Covid-19. Chart has ongoing communications about safety performance at all levels of the organization.
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Certain international employees are part of trade unions or work councils across Europe, the Americas, Asia and Africa. We have proactive engagement and believe we have positive relations with our employees, including those represented by trade unions and work councils. We have had no material work stoppages. Chart is committed to attracting and retaining the best talent.
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Our head of global environmental, health and safety (EHS) coordinates all EHS matters with our sites, regularly updates our executive staff on our 8 EHS matters and coordinates with our Global Safety Council, which meets monthly to discuss accidents, injuries, near misses, trends and lessons learned.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe OECD, which represents a coalition of member countries, has issued recommendations that, in some cases, would make substantial changes to numerous long-standing tax positions and principles. These contemplated changes, to the extent adopted 18 by OECD members and/or other countries, could increase tax uncertainty and may adversely affect our provision for income taxes.
Biggest changeThe Organisation for Economic Co-operation and Development (OECD)’s base erosion and profit shifting (BEPS) project is an area we continue to monitor due to its global reach. The OECD, which represents a coalition of member countries, has issued recommendations that, in some cases, would make substantial changes to numerous long-standing tax positions and principles.
We are subject to numerous environmental, health and safety laws and regulations that impose various environmental controls on us or otherwise relate to environmental protection and various health and safety matters, including the discharge of pollutants in the air and water, the handling, use, treatment, storage and clean-up of solid and hazardous materials and wastes, the investigation and remediation of soil and groundwater affected by hazardous substances and the requirement to obtain and maintain permits and licenses.
We are subject to numerous environmental, health and safety laws and regulations that impose various environmental controls on us or otherwise relate to environmental protection and various health and safety matters, including the discharge of 15 pollutants in the air and water, the handling, use, treatment, storage and clean-up of solid and hazardous materials and wastes, the investigation and remediation of soil and groundwater affected by hazardous substances and the requirement to obtain and maintain permits and licenses.
Dividend requirements associated with the Series B Mandatory Convertible Preferred Stock that Chart issued to fund a portion of the Acquisition subject it to certain risks. In December 2022, we issued 8,050,000 depositary shares, each representing a 1/20th interest in a share of Chart’s Series B Mandatory Convertible Preferred Stock (the “Mandatory Convertible Preferred Stock”).
Dividend requirements associated with the Series B Mandatory Convertible Preferred Stock that Chart issued to fund a portion of the Howden Acquisition subject it to certain risks. In December 2022, we issued 8,050,000 depositary shares, each representing a 1/20th interest in a share of Chart’s Series B Mandatory Convertible Preferred Stock (the “Mandatory Convertible Preferred Stock”).
See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.” 19 If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to sell assets, seek additional capital or seek to restructure or refinance our indebtedness.
See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.” If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to sell assets, seek additional capital or seek to restructure or refinance our indebtedness.
The option counterparties for our convertible note hedging arrangements are financial institutions, and we will be subject to the risk that any or all of them might default under the convertible note hedge and capped call transactions. Our exposure to the credit risk of the option counterparties is not secured by any collateral.
The option counterparties for our convertible note hedging arrangements are financial institutions, and we will be subject to the risk that any or all of them might default under the convertible note hedge and capped call transactions. Our exposure to 19 the credit risk of the option counterparties is not secured by any collateral.
Fluctuations in currency exchange rates have had, and will continue to have an impact on our financial condition, operating results, and cash flow. While we monitor and manage our foreign currency exposure with limited use of derivative financial instruments to mitigate these exposures, fluctuations in currency exchange rates may materially impact our financial and operational results.
Fluctuations in currency exchange rates have had and will continue to have an impact on our financial condition, operating results, and cash flow. While we monitor and manage our foreign currency exposure with use of derivative financial instruments to mitigate these exposures, fluctuations in currency exchange rates may materially impact our financial and operational results.
Due to the high pressures and low temperatures at which many of our products are used, the inherent risks associated with concentrated industrial and hydrocarbon gases, and the fact that some of our products are relied upon by our customers or end users in their facilities or operations or are manufactured for relatively broad industrial, transportation, or consumer use, we face an inherent risk of exposure to claims (which we have been subject to from time to time and some of which were substantial including the cryobiological storage tank lawsuits filed in 2018 as discussed in Item 3.
Due to the high pressures and low temperatures at which many of our products are used, the inherent risks associated with concentrated industrial and hydrocarbon gases, and the fact that some of our products are relied upon by our customers or end users in their facilities or operations or are manufactured for relatively broad industrial, transportation, or consumer use, we face an inherent risk of exposure to claims (which we have been subject to from time to time and some of which were substantial including the cryobiological storage tank lawsuits as discussed in Item 3.
Although modifications and terminations of our orders may be partially offset by cancellation fees, customers can, and sometimes do, terminate or modify these orders. We cannot predict whether cancellations will accelerate or diminish in the future.
Although modifications and terminations of our orders may be fully or partially offset by cancellation fees, customers can, and sometimes do, terminate or modify these orders. We cannot predict whether cancellations will accelerate or diminish in the future.
Further, we also could be subject to future liability resulting from conditions that are currently unknown to us that could be discovered in the future. We are currently remediating or developing work plans for remediation of environmental conditions involving certain current or former facilities.
Further, we also could be subject to future liability resulting from conditions that are currently unknown to us that could be discovered in the future. We are currently remediating or developing work plans for remediation of environmental conditions involving certain current facilities.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Debt Instruments and Related Covenants.” If new debt is added to our current debt levels, the related risks that we now face could intensify.
“Management’s Discussion and Analysis of Financial 18 Condition and Results of Operations — Liquidity and Capital Resources — Debt Instruments and Related Covenants.” If new debt is added to our current debt levels, the related risks that we now face could intensify.
On December 31, 2020, we amended the Indenture governing our 1.00% Convertible Senior Subordinated Notes due November 2024 to eliminate share settlement thus leaving us with two settlement options: (1) cash settlement or (2) cash for par and any combination of cash and shares for the excess settlement amount above the $258.8 million aggregate principal amount of our 1.00% Convertible Senior Subordinated Notes due November 2024.
On December 31, 2020, we amended the Indenture governing our 1.00% Convertible Senior Subordinated Notes due November 2024 to eliminate share settlement thus leaving us with two settlement options: (1) cash settlement or (2) cash for par and any combination of cash and shares for the excess settlement amount above the $258.7 million aggregate principal amount of our 1.00% Convertible Senior Subordinated Notes due November 2024.
Changes in U.S. or international social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently sell our products or conduct our business, as well as any negative sentiment toward the U.S. as a result of such changes, could adversely affect our business.
Changes in U.S. or international social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently sell our products or conduct our business, as well as any negative sentiment toward the United States as a result of such changes, could adversely affect our business.
Cancellations of purchase orders, indications that the customers will not perform or reductions of product quantities in existing contracts could substantially and materially reduce our backlog and, consequently, our future sales. Our failure to replace canceled orders could negatively impact our sales and results of operations. We did not have any significant cancellations in 2022, 2021 and 2020.
Cancellations of purchase orders, indications that the customers will not perform or reductions of product quantities in existing contracts could substantially and materially reduce our backlog and, consequently, our future sales. Our failure to replace canceled orders could negatively impact our sales and results of operations. We did not have any significant cancellations in 2023, 2022 and 2021.
If our vendors for these materials and components are unable to meet our requirements, fail to make shipments in a timely manner, or ship defective materials or components, we could experience a shortage or delay in supply or fail to meet our contractual requirements, which would adversely affect our results of operations and negatively impact our cash flow and profitability.
If our vendors for these m aterials and components are unable to meet our requirements, fail to make shipments in a timely manner, or ship defective materials or components, we could experience a shortage or delay in supply or fail to meet our contractual requirements, which would adversely affect our results of operations and negatively impact our cash flow and profitability.
Further, the protection of our intellectual property may require expensive investment in protracted litigation and the investment of substantial management time and there is no assurance we ultimately would prevail or that a successful outcome would lead to an economic benefit that is greater than the investment in the litigation.
Further, the protection of our intellectual property may require expensive investment in protracted litigation and the investment of substantial management time and there is no assurance we ultimately would prevail or that a successful outcome would lead to a n economic benefit that is greater than the investment in the litigation.
Our backlog can be significantly affected by the timing of orders for large projects, and the amount of our backlog at December 31, 2022 is not necessarily indicative of future backlog levels or the rate at which backlog will be recognized as sales.
Our backlog can be significantly affected by the timing of orders for large projects, and the amount of our backlog at December 31, 2023 is not necessarily indicative of future backlog levels or the rate at which backlog will be recognized as sales.
Although we maintain insurance subject to certain deductibles, which may cover some of our losses, that insurance may become unavailable or prove to be inadequate. We are subject to regulations governing the export of our products. Due to our significant foreign sales, our export activities are subject to regulation, including the U.S. Treasury Department’s Office of Foreign Assets Control’s regulations.
Although we maintain insurance subject to certain deductibles, which may cover some of our losses, that insurance may become unavailable or prove to be inadequate. We are subject to regulations governing the export of our products. Our export activities are subject to regulation, including the U.S. Treasury Department’s Office of Foreign Assets Control’s regulations.
We will be required to make significant cash expenditures to achieve such cost savings and we cannot be assured that these expenditures will not be higher than anticipated. Furthermore, there can be no assurances that such cost savings measures will not cause disruptions or other negative impacts to our operations, business or revenues.
We may be required to make significant cash expenditures to achieve such cost savings and commercial synergies and we cannot be assured that these expenditures will not be higher than anticipated. Furthermore, there can be no assurances that such cost savings measures will not cause disruptions or other negative impacts to our operations, business or revenues.
Complying with these 15 various laws is difficult and could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.
Complying with these various laws is 14 difficult and could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.
Additionally, such insurance may become difficult to obtain or be unobtainable in the future on terms acceptable to us. We had net out-of-pocket exposure with respect to the recent settlement related to the Cryobiological business in the amount of $73.0 million.
Additionally, such insurance may become difficult to obtain or be unobtainable in the future on terms acceptable to us. We had net out-of-pocket exposure with respect to the March 2023 settlement related to the Cryobiological business in the amount of $73.0 million.
Despite our training and compliance programs, we cannot assure you that our internal control policies and procedures always will protect us from reckless or criminal acts committed by our employees or agents. Our continued expansion outside the U.S., including in developing countries, could increase the risk of such violations in the future.
Despite our training and compliance programs, we cannot assure you that our internal control policies and procedures always will protect us from reckless or criminal acts committed by our employees or agents. Our continued expansion outside the United States, including in developing countries, could increase the risk of such violations in the future.
As of December 31, 2022, we had $258.8 million aggregate principal amount of our 1.00% Convertible Senior Subordinated Notes due November 2024. Prior to the close of business on the business day immediately preceding August 15, 2024, the convertible notes will be convertible only upon satisfaction of certain conditions.
As of December 31, 2023, we had $258.7 million aggregate principal amount of our 1.00% Convertible Senior Subordinated Notes due November 2024. Prior to the close of business on the business day immediately preceding August 15, 2024, the convertible notes will be convertible only upon satisfaction of certain conditions.
The materials and components we use to manufacture our products are sometimes custom made and may be available only from a few suppliers, and the lead times required to obtain these materials and components can often be significant.
The materials and components we use to manufacture our products are sometimes custom made and may be avail able only from a few suppliers, and the lead times required to obtain these materials and components can often be significant.
We also will have increased interest rate exposure with respect to certain indebtedness incurred in connection with the pending Howden acquisition. As an increasingly global business, we are exposed to economic, political, and other risks in different countries which could materially reduce our sales, profitability or cash flows, or materially increase our liabilities.
We also have increased interest rate exposure with respect to certain indebtedness incurred in connection with the Howden Acquisition. As a global business, we are exposed to economic, political, and other risks in different countries which could materially reduce our sales, profitability or cash flows, or materially increase our liabilities.
Our common stock will rank junior to the Mandatory Convertible Preferred Stock with respect to the payment of dividends and amounts payable in the event of our liquidation, dissolution or winding-up of our affairs.
Our common stock ranks junior to the Mandatory Convertible Preferred Stock with respect to the payment of dividends and amounts payable in the event of our liquidation, dissolution or winding-up of our affairs.
Our common stock will rank junior to the Mandatory Convertible Preferred Stock with respect to dividends and amounts payable in the event of our liquidation, dissolution or winding-up of our affairs.
Our common stock ranks junior to the Mandatory Convertible Preferred Stock with respect to dividends and amounts payable in the event of our liquidation, dissolution or winding-up of our affairs.
Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations or financial condition. Our operations could be impacted by the effects of severe weather.
Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations or financial condition. Our operations could be impacted by the effects of severe weather. Some of our operations, including our operations in the U.S.
Demand for our products depends in large part upon the level of capital and maintenance expenditures by many of our customers and end-users, in particular those customers in the global hydrocarbon and industrial gas markets. These customers’ expenditures historically have been cyclical in nature and vulnerable to economic downturns.
Demand for our products depends to a significant extent upon the level of capital and maintenance expenditures by many of our customers and end-users, in particular those customers in the global hydrocarbon and industrial gas markets. These customers’ expenditures historically have been cyclical in nature and vulnerable to economic downturns.
Our future results could be harmed by a variety of factors, including: • changes in foreign currency exchange rates; • exchange controls and currency restrictions; • changes in a specific country’s or region’s political, social or economic conditions, particularly in emerging markets; • civil unrest, the threat of or actual military conflict between nations, such as the Russian invasion of Ukraine, or increased international tensions, such as between the U.S. and China, other turmoil or outbreak of disease or illness, such as Covid-19, in any of the countries in which we sell our products or in which we or our suppliers operate; • tariffs, other trade protection measures, as discussed in more detail below, and import or export licensing requirements; • potential adverse changes in trade agreements between the United States and foreign countries, including the recently enacted United States-Mexico-Canada Agreement (USMCA), among the United States, Canada and Mexico; • uncertainty and potentially negative consequences relating to the implementation of the United Kingdom’s decision to leave the European Union (“Brexit”); 14 • potentially negative consequences from changes in U.S. and international tax laws; • difficulty in staffing and managing geographically widespread operations; • differing labor regulations; • requirements relating to withholding taxes on remittances and other payments by subsidiaries; • different regulatory regimes controlling the protection of our intellectual property; • restrictions on our ability to own or operate subsidiaries, make investments or acquire new businesses in these jurisdictions; • restrictions on our ability to repatriate dividends from our foreign subsidiaries; • difficulty in collecting international accounts receivable; • difficulty in enforcement of contractual obligations under non-U.S. law; • transportation delays or interruptions; • changes in regulatory requirements; and • the burden of complying with multiple and potentially conflicting laws.
Our future results could be harmed by a variety of factors, including: • changes in foreign currency exchange rates; • exchange controls and currency restrictions; • changes in a specific country’s or region’s political, social or economic conditions, particularly in emerging markets; 13 • civil unrest, the threat of or actual military conflict between nations, other turmoil or outbreak of disease or illness, such as Covid-19, in any of the countries in which we sell our products or in which we or our suppliers operate; • tariffs, other trade protection measures, as discussed in more detail below, and import or export licensing requirements; • potential adverse changes in trade agreements between the United States and foreign countries, including the recently enacted United States-Mexico-Canada Agreement (USMCA), among the United States, Canada and Mexico; • potentially negative consequences from changes in U.S. and international tax laws; • difficulty in staffing and managing geographically widespread operations; • differing labor regulations; • requirements relating to withholding taxes on remittances and other payments by subsidiaries; • different regulatory regimes controlling the protection of our intellectual property; • restrictions on our ability to own or operate subsidiaries, make investments or acquire new businesses in these jurisdictions; • restrictions on our ability to repatriate dividends from our foreign subsidiaries; • difficulty in enforcement of contractual obligations under non-U.S. law; • transportation delays or interruptions; • changes in regulatory requirements; and • the burden of complying with multiple and potentially conflicting laws.
Since we manufacture and sell our products worldwide, our business is subject to risks associated with doing business internationally. In 2022, 2021 and 2020, 42%, 56%, and 51%, respectively, of our sales occurred in international markets.
Since we manufacture and sell our products worldwide, our business is subject to risks associated with doing business internationally. In 2023, 2022 and 2021, 59%, 42%, and 56%, respectively, of our sales occurred in international markets.
“Legal Proceedings” relating to our since divested Cryobiological business, but for which we retained and are in the process of settling certain potential liabilities) in the event that the failure, use, or misuse of our products results, or is alleged to result, in death, bodily injury, property damage, or economic loss.
“Legal Proceedings” relating to our since divested 12 Cryobiological business, but for which we retained and settled certain liabilities) in the event that the failure, use, or misuse of our products results, or is alleged to result, in death, bodily injury, property damage, or economic loss.
We do a significant amount of business that would be impacted by changes to the trade policies of the U.S. and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions). Such changes have the potential to adversely impact the U.S. economy or certain sectors thereof, our industry and the global demand for our products.
We do business that could be impacted by changes to the trade policies of the United States and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions). Such changes have the potential to adversely impact the U.S. economy or certain sectors thereof, our industry and the global demand for our products.
Even after the Covid-19 pandemic subsides, there may be long-term effects on our business practices and customers in economies in which we operate that could severely disrupt our operations and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
Even after a public health crisis subsides, there may be long-term effects on our business practices and customers in economies in which we operate that could severely disrupt our operations and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
Even if we effectively implement these projects, the orders needed to support the capital expenditure may not be obtained, may be delayed, or may be less than expected, which may result in sales or profitability at lower levels than anticipated.
Even if we effectively implement the projects, the orders needed to support the capital expenditures or increased capacity may not be obtained, may be delayed, or may be less than expected, which may result in sales or profitability at lower levels than expected.
We operate in many parts of the world that have experienced corruption to some degree, and in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices.
Our internal policies mandate compliance with these anti-corruption laws. We operate in many parts of the world that have 16 experienced corruption to some degree, and in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices.
The terms of the Mandatory Convertible Preferred Stock further provide that if dividends have not been declared and paid for six or more dividend periods (including, for the avoidance of doubt, the dividend period beginning on, and including, the initial issue date and ending on, but excluding, March 15, 2023), whether or not for consecutive dividend periods, the holders of such shares of Mandatory Convertible Preferred Stock, voting together as a single class with holders of all other preferred stock of equal rank having similar voting rights, will be entitled at our next annual or special meeting of stockholders to vote for the election of a total of two additional members of our board of directors, subject to certain limitations.
The terms of the Mandatory Convertible Preferred Stock further provide that if dividends have not been declared and paid for six or more dividend periods whether or not for consecutive dividend periods, the holders of such shares of Mandatory Convertible Preferred Stock, voting together as a single class with holders of all other preferred stock of equal rank having similar voting rights, will be entitled at our next annual or special meeting of stockholders to vote for the election of a total of two additional members of our board of directors, subject to certain limitations.
The loss of, or significant reduction or delay in, purchases by our largest customers could reduce our sales and profitability. While we sell to more than 2,500 customers, sales to our top ten customers accounted for 38%, 39%, and 42% of consolidated sales in 2022, 2021 and 2020, respectively.
The loss of, or significant reduction or delay in, purchases by our largest customers could reduce our sales and profitability. While we sell to more than 7,000 customers, sales to our top ten customers accounted for 25%, 38%, and 39% of consolidated sales in 2023, 2022 and 2021, respectively.
Our international operations and sales also expose us to different local political and business risks and challenges. In addition, because some of our international sales are to suppliers that perform work for foreign governments, we are subject to the political risks associated with foreign government projects.
Our international operations and sales also expose us to different local political and business risks and challenges. In addition, at times some of our sales are to suppliers that perform work for foreign governments, and as a result we may be subject to the political risks associated with foreign government projects.
Our ability to realize the expected cost savings, such as in the pending Howden acquisition, depend on factors beyond our control, such as operating difficulties, increased operating costs, competitors and customers, delays in implementing initiatives and general economic or industry conditions.
Our ability to realize the expected cost savings and commercial synergies depend on factors such as operating difficulties, increased operating costs, competitors and customers, delays in implementing initiatives and general economic or industry conditions.
The failure to achieve the anticipated cost savings or synergies of our recent significant acquisitions or recognize the anticipated market opportunities or integration from our new clean energy acquisitions, including our pending acquisition of Howden, could have a material adverse effect on our business, financial condition and results of operations.
The failure to achieve the anticipated cost savings or commercial synergies of our recent significant acquisitions or recognize the anticipated market opportunities or integration from our acquisitions could have a material adverse effect on our business, financial condition, and results of operations.
In addition, unstable political conditions or civil unrest, including political instability or threatened military actions in Eastern Europe, the Middle East, Hong Kong or elsewhere, could negatively impact our order levels and sales in a region or our ability to collect receivables from customers or operate or execute projects in a region.
In addition, unstable political conditions or civil unrest, including political instability or threatened military actions could negatively impact our order levels and sales in a region or our ability to collect receivables from customers or operate or execute projects in a region.
Our senior secured revolving credit facility provides commitments of up to $1,000.0 million, approximately $806.4 million of which would have been available for future borrowings (after giving effect to letters of credit and bank guarantees outstanding) as of December 31, 2022.
Our senior secured revolving credit facility provides commitments of up to $1,000.0 million, approximately $625.2 million of which would have been available for future borrowings (after giving effect to letters of credit and bank guarantees outstanding) as of December 31, 2023. See Item 7.
If we are unable to successfully control our costs and efficiently manage our operations, it may place a significant strain on our management and administrative resources and lead to increased costs and reduced profitability. We have implemented cost savings initiatives to align our business with current and expected economic conditions.
If we are unable to successfully control our costs and efficiently manage our operations, it may lead to increased costs and reduced profitability. We have implemented cost savings initiatives to align our business with current and expected economic conditions.
Despite our current debt levels, we may still be able to incur substantially more debt. This could further exacerbate the risks that we face . We may be able to incur substantial additional indebtedness in the future. The terms of our debt instruments do not fully prohibit us from doing so.
We may incur substantial additional indebtedness, which could further exacerbate the risks that we face . We may be able to incur substantial additional indebtedness in the future. The terms of our debt instruments do not fully prohibit us from doing so.
Current economic and political conditions make tax rules in jurisdictions subject to significant change, and unanticipated changes in our effective tax rate could adversely affect our future results. Our future results of operations could be affected by changes in the effective tax rate as a result of changes in tax laws, regulations and judicial rulings.
Tax rules are subject to change, and unanticipated changes in our effective tax rate could adversely affect our future results. Our future results of operations could be affected by changes in the effective tax rate as a result of changes in tax laws, regulations and judicial rulings.
The implementation of new tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, and certain foreign governments have instituted or have been considering imposing trade sanctions on certain U.S. goods.
U.S. government policy changes and proposals may result in greater restrictions and economic disincentives on international trade. The implementation of new tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, and certain foreign governments have instituted or have been considering imposing trade sanctions on certain U.S. goods.
Risks Related to Our Business The markets we serve are subject to cyclical demand (which we have managed to balance through diversification of our products and offerings) and vulnerable to economic downturn, which could harm our business and make it difficult to project long-term performance.
Risks Related to Our Business The markets we serve are subject to cyclical demand and vulnerable to economic downturn, which could harm our business and make it difficult to project long-term performance.
We carry goodwill and indefinite-lived intangible assets on our balance sheet, which are subject to impairment testing and could subject us to significant non-cash charges to earnings in the future if impairment occurs. As of December 31, 2022, we had goodwill and indefinite-lived intangible assets of $1,148.4 million, which represented approximately 19.5% of our total assets.
We carry goodwill and indefinite-lived intangible assets on our balance sheet, which are subject to impairment testing and could subject us to significant non-cash charges to earnings in the future if impairment occurs. As of December 31, 2023, we had goodwill and indefinite-lived intangible assets of $3,516.9 million, which represented approximately 38.6% of our total assets.
Our effective tax rate could also be adversely affected by changes in the mix of earnings and losses in countries with differing statutory tax rates, certain non-deductible expenses arising from share-based compensation, the valuation of deferred tax assets and liabilities and changes in accounting principles.
We will continue to monitor developments and impacts to our provision for income taxes. Our effective tax rate could also be adversely affected by changes in the mix of earnings and losses in countries with differing statutory tax rates, certain non-deductible expenses arising from share-based compensation, the valuation of deferred 17 tax assets and liabilities and changes in accounting principles.
We sell certain of our products to the U.S. government; and, therefore, we must comply with and are affected by laws and regulations governing purchases by the U.S. government.
From time to time, certain of our products and services may be provided to the U.S. government; and, therefore, we must comply with and are affected by laws and regulations governing purchases by the U.S. government.
Potential acquisition opportunities become available to us from time to time, and we periodically engage in discussions or negotiations relating to potential acquisitions, including acquisitions that may be material in size or scope to our business.
Potential acquisition opportunities become available to us from time to time, and we periodically engage in discussions or negotiations relating to potential acquisitions, including acquisitions that may be material in size or scope to our business. Any acquisition may or may not occur and, if an acquisition does occur, it may not be successful in enhancing our business.
If we are unable to align our cost structure in response to prevailing economic conditions on a timely basis, or if implementation or failure to implement any cost structure adjustments has an adverse impact on our business or prospects, then our financial condition, results of operations, and cash flows may be negatively affected. 11 Similarly, it is critical that we appropriately manage our planned capital expenditures in this uncertain economic environment.
If we are unable to align our cost structure in response to prevailing economic conditions on a timely basis, or if implementation or failure to implement any cost structure adjustments has an adverse impact on our business or prospects, then our financial condition, results of operations, and cash flows may be negatively affected.
If the performance of the assets in our pension plan or the multi-employer plan does not meet expectations or if other actuarial assumptions are modified, our required pension contributions for future years could be higher than we expect, which may negatively impact our results of operations, cash flows and financial condition. 17 We operate in many different jurisdictions, and we could be adversely affected by violations of the U.S.
If the performance of the assets in our Chart pension plan, the Howden pension plans or the multi-employer plan does not meet expectations or if other actuarial assumptions are modified, our required pension contributions for future years could be higher than we expect, which may negatively impact our results of operations, cash flows and financial condition.
Our level of indebtedness could have important negative consequences, including: • difficulty in generating sufficient cash flow and reduced availability of cash for our operations and other business activities; • difficulty in obtaining financing in the future; • exposure to risk of increased interest rates due to variable rates of interest under our senior secured revolving credit facility; • vulnerability to general economic downturns and adverse industry conditions; • increased competitive disadvantage due to our debt service obligations; • adverse customer reaction to our debt levels; • inability to comply with covenants in, and potential for default under, our debt instruments; and • failure to refinance any of our debt.
Our level of indebtedness could have significant consequences, including: • reduced availability of cash for our operations and other business activities; • difficulty in obtaining financing in the future; • exposure to risk of increased interest rates on variable rate indebtedness under our senior secured revolving credit facility and term loans; • vulnerability to general economic downturns and adverse industry conditions; • increased competitive disadvantage compared to our competitors that have less debt or are less leveraged; • adverse customer reaction to our debt levels; • inability to comply with covenants in, and potential for default under, our debt instruments; and • failure to refinance any of our debt.
Our exposure to fixed pricing on certain long-term customer contracts and performance guarantees, could negatively impact our financial results. A substantial portion of our sales has historically been derived from long-term contracts which may involve long-term fixed price commitments to customers or guarantees of equipment or process performance and which are sometimes difficult to execute.
A portion of our sales has historically been derived from long-term contracts which may involve long-term fixed price commitments to customers or guarantees of equipment or process performance and which are sometimes difficult to execute.
The patents in our patent portfolio are scheduled to expire from 2023 to 2040.
The patents in our patent portfolio are scheduled to expire from 2024 to 2042.
As a result of attaining these specified market price conditions, the notes were convertible in the first quarter of 2023, although no notes have been converted to date.
As a result of attaining these specified market price conditions, the notes are convertible in the first quarter of 2024, although there have been no significant conversions to date.
If we determine at a future time that further impairment exists, it may result in a significant non-cash charge to earnings and lower stockholders’ equity. 12 The Covid-19 pandemic may disrupt our operations and could adversely affect our business in the future.
If we determine at a future time that an impairment exists, it may result in a significant non-cash charge to earnings and lower stockholders’ equity. A public health crisis could cause disruptions to our operations which could adversely affect our business in the future.
Furthermore, the prices we are able to charge for our products and services are affected by a number of other factors, including: • general economic and political conditions; • our customers’ desire to reduce their costs; • the competitive environment; • our ability to accurately estimate our costs, including our ability to estimate the impact of inflation on our costs over long-term contracts; and • the procurement practices of our customers.
Furthermore, the prices we are able to charge for our products and services are affected by a number of other factors, including: • general economic and political conditions; • our customers’ desire to reduce their costs; • the competitive environment; • our ability to accurately estimate our costs, including our ability to estimate the impact of inflation on our costs over long-term contracts; and • the procurement practices of our customers. 11 Our inability to pass increased prices along to our customers in a timely manner could have a material adverse effect on our business, financial condition or results of operations.
The interpretation and application of data protection laws, including but not limited to the General Data Protection Regulation (the “GDPR”) in Europe and evolving standards in the U.S., are uncertain and evolving. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data security practices.
The interpretation and application of data protection laws are uncertain and evolving. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data security practices.
Some of our operations, including our operations in New Iberia, Louisiana, Theodore, Alabama and Houston, Texas, are located in geographic regions and physical locations that are susceptible to physical damage and longer-term economic disruption from severe weather. We also could make significant future capital expenditures in hurricane-susceptible or other severe weather locations from time to time.
Gulf Coast, are located in geographic regions and physical locations that are susceptible to physical damage and longer-term economic disruption from severe weather. We also could make significant future capital expenditures in hurricane-susceptible or other severe weather locations from time to time.
As of December 31, 2022, the projected benefit obligation under our pension plan was approximately $50.0 million, and the value of the assets of the plan was approximately $49.1 million, resulting in our pension plan being underfunded by approximately $0.9 million. We are also a participant in a multi-employer plan, which is underfunded.
As of December 31, 2023, the aggregate projected benefit obligation of the Howden pension plans was $43.0 million, and the aggregate value of the assets of the Howden pension plans was $41.8 million, resulting in the Howden pension plans being underfunded by $1.2 million in the aggregate. We are also a participant in a multi-employer plan, which is underfunded.
Although our effective tax rate decreased during 2018, there can be no assurances that any expected benefit from the Tax Cuts and Jobs Act will be maintained long-term given political and other uncertainties.
As of December 31, 2023, provisions of the law as currently constructed are expected to change for future tax years. Although our effective tax rate decreased during 2018, there can be no assurances that any expected benefit from the Tax Cuts and Jobs Act will be maintained long-term given political and other uncertainties.
Our backlog is comprised of the portion of firm signed purchase orders or other written contractual commitments received from customers that we have not recognized as sales. The dollar amount of backlog as of December 31, 2022 was $2,338.1 million.
Our backlog is subject to modification, termination or reduction of orders, which could negatively impact our sales. Our backlog is comprised of the portion of firm signed purchase orders or other written contractual commitments received from customers that we have not recognized as sales. The dollar amount of backlog as of December 31, 2023 was $4,278.8 million.
Global economic conditions during the 2008-2009 economic downturn resulted in the actual or perceived failure or financial difficulties of many financial institutions.
Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions.
These potential physical effects may adversely impact the cost, production, sales and financial performance of our operations. Our pension plan is currently underfunded, and we contribute to a multi-employer plan for collective bargaining U.S. employees, which is underfunded. Certain U.S. hourly and salaried employees are covered by our defined benefit pension plan. The plan has been frozen since February 2006.
These potential physical effects may adversely impact the cost, production, sales and financial performance of our operations. We could be obligated to make significant contributions to our pension plans, some of which are underfunded, and we contribute to a multi-employer plan for collective bargaining U.S. employees, which is underfunded.
Foreign Corrupt Practices Act and similar worldwide anti-corruption laws. The U.S. Foreign Corrupt Practices Act (“FCPA”) and similar worldwide anti-corruption laws generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business. Our internal policies mandate compliance with these anti-corruption laws.
We operate in many different jurisdictions, and we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-corruption laws. The U.S. Foreign Corrupt Practices Act (“FCPA”) and similar worldwide anti-corruption laws generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business.
If we were unable to repay or otherwise refinance this indebtedness when due, our lenders could sell the collateral securing the senior secured revolving credit facility due October 2026 and the secured notes, which constitutes substantially all of our and our domestic wholly-owned subsidiaries’ assets. 20 Our 1.00% Convertible Senior Subordinated Notes due November 2024 have certain fundamental change and conditional conversion features and our Senior Secured Notes due 2030 and our Senior Unsecured Notes due 2031 have certain change in control features which, if triggered, may adversely affect our financial condition.
If we were unable to repay or otherwise refinance this indebtedness when due, our lenders could sell the collateral securing the senior secured revolving credit facility due October 2026 and the secured notes, which constitutes substantially all of our domestic wholly-owned subsidiaries’ assets.
The unauthorized use of our know-how by third parties could reduce or eliminate any competitive advantage we have developed, cause us to lose sales or otherwise harm our business or increase our expenses as we attempt to enforce our rights. 16 We may be required to make expenditures in order to comply with environmental, health and safety laws and climate change regulations, or incur additional liabilities under these laws and regulations.
The unauthorized use of our know-how by third parties could reduce or eliminate any competitive advantage we have developed, cause us to lose sales or otherwise harm our business or increase our expenses as we attempt to enforce our rights.
While our sales to particular customers fluctuate from period to period, the global producers, distributors and users of energy and industrial gases and their suppliers tend to be a consistently large source of our sales. 10 The loss of any of our major customers, consolidation of our customers, or a decrease or delay in orders or anticipated spending by such customers could materially reduce our sales and profitability.
While our sales to particular customers fluctuate from period to period, sales to large customers, including the global producers, distributors and users of energy and industrial gases and their suppliers, tend to be a consistently large source of our sales.
For example, we have invested or plan to invest approximately $60 to $65 million in new capital expenditures in 2023 relating to our existing business. If we fail to manage the projects related to these capital expenditures in an effective manner, we may lose the opportunity to obtain some new customer orders or the ability to operate our businesses efficiently.
It is critical that we appropriately manage our planned capital expenditures. If we fail to manage the projects related to these capital expenditures in an effective and timely manner, we may lose the opportunity to obtain some new customer orders or the ability to operate our business efficiently.
In addition, any acquisitions of businesses with foreign operations or sales may increase our exposure to risks inherent in doing business outside the United States.
Such a strategy involves the potential risks inherent in assessing the value, strengths, weaknesses, contingent or other liabilities, and potential profitability of acquisition candidates and in integrating the operations of acquired companies. In addition, any acquisitions of businesses with foreign operations or sales may increase our exposure to risks inherent in doing business outside the United States.
The cost, quality, and availability of raw materials, certain specialty metals and specialized components used to manufacture our products are critical to our success.
We depend on the availability of certain key suppliers; if we experience difficulty with a supplier, we may have difficulty finding alternative sources of supply. The cost, quality, and availability of raw materials, certain specialty metals and specialized components used to manufacture our products are critical to our success.
Although order activity in 2022 increased year over year, we continued to experience energy price volatility and our customers’ adjusted project timing. Delays in the anticipated timing of LNG infrastructure build out could materially reduce the demand for our products. We may fail to successfully integrate companies that provide complementary products or technologies.
Although order activity in 2023 increased year over year, we continued to experience energy price volatility and our customers’ adjusted project timing. 10 We may fail to successfully integrate companies that provide complementary products or technologies. An important component of our recent business strategy has been the acquisition of businesses that complement our existing products and services.
As energy policy continues to evolve, the existing rules and incentives that impact the energy-related segments of our business may change.
We anticipate that energy policy will continue to be an important regulatory priority globally, as well as on a national, state, and local level. As energy policy continues to evolve, the existing rules and incentives that impact the energy-related segments of our business may change.
It is difficult, if not impossible, to 13 predict what changes in energy policy might occur in the future and the timing of potential changes and their impact on our business, including potential changes that could originate from the current U.S Presidential administration.
It is difficult, if not impossible, to predict what changes in energy policy might occur in the future and the timing of potential changes and their impact on our business. Our exposure to fixed pricing on certain long-term customer contracts and performance guarantees, could negatively impact our financial results.
These and other provisions applicable to the notes may have the effect of increasing the cost of acquiring us or otherwise discourage a third party from acquiring us. 21 The issuance of common stock upon conversion of our 1.00% Convertible Senior Subordinated Notes due November 2024, 6.75% Series B Mandatory Convertible Preferred Stock or the Series A Cumulative Participating Convertible Preferred Stock to be issued upon the closing of the Howden Acquisition could cause dilution to the interests of our existing stockholders.
Risks Related to the Trading Market for Our Preferred and Common Stock The issuance of common stock upon conversion of our 1.00% Convertible Senior Subordinated Notes due November 2024 or 6.75% Series B Mandatory Convertible Preferred Stock could cause dilution to the interests of our existing stockholders.
Governmental energy policies could change or expected changes could fail to materialize which could adversely affect our business or prospects. Energy policy can develop rapidly in the markets we serve, including the United States, Asia, Australia, Europe, and Latin America.
Energy policies could change or expected changes could fail to materialize which could adversely affect our business or prospects. Energy policy can develop rapidly in the global markets we serve. Within the last few years, significant developments have taken place, primarily in international markets that we serve with respect to energy policy and related regulations.
In addition, at that date, under our senior secured revolving credit facility, we had $89.1 million of letters of credit and bank guarantees outstanding and borrowing capacity of approximately $806.4 million. Further, as of December 31, 2022, our indebtedness under our senior secured notes due 2030 and our senior unsecured notes due 2031 was $1,460.0 million and $510.0 million, respectively.
In addition, at that date, under our senior secured revolving credit facility, we had $272.0 million of letters of credit and bank guarantees outstanding and borrowing capacity of approximately $625.2 million. Through separate facilities, our subsidiaries had $134.3 million of letters of credit and bank guarantees outstanding at December 31, 2023.
We can provide no assurances as to the financial stability or viability of the option counterparties. Risks Related to the Trading Market for Our Common Stock Our common stock has experienced, and may continue to experience, price volatility.
We can provide no assurances as to the financial stability or viability of the option counterparties.

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Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−7 removed0 unchanged
Biggest changeOwned Manufacturing/Office/Service Regulatory Environment We are subject to federal, state, and local regulations relating to the discharge of materials into the environment, production and handling of hazardous and regulated materials, and the conduct and condition of our production facilities. We do not believe that these regulatory requirements have had a material effect upon our capital expenditures, earnings, or competitive position.
Biggest changeWe do not believe that these regulatory requirements have had a material effect on our capital expenditures, earnings, or competitive position. We are not anticipating any material capital expenditures in 2024 that are directly related to regulatory compliance matters.
We are not anticipating any material capital expenditures in 2023 that are directly related to regulatory 23 compliance matters. We are also not aware of any pending or potential regulatory changes that would have a material adverse impact on our business.
We are also not aware of any pending or potential regulatory changes that would have a material adverse impact on our business.
Item 2. Properties We occupy 65 facilities totaling approximately 5.9 million square feet, including the locations listed below, with the majority devoted to manufacturing, assembly, and storage. We also own several plots of land in the Czech Republic totaling approximately 0.5 million square feet, with the majority devoted to outdoor storage.
Item 2. Properties We occupy 186 facilities throughout the world totaling approximately 13.0 million square feet with the majority devoted to manufacturing, assembly, and storage, none of which are individually material. Of these facilities, approximately 8.6 million square feet are owned, and 4.4 million square feet are occupied under operating leases.
Removed
Of these facilities, approximately 4.2 million square feet are owned and 1.7 million square feet are occupied under operating leases. One of our owned facilities, a 0.1 million square foot facility in Clarksville, Arkansas, is leased to a third party. We currently lease approximately 20.8 thousand square feet for our corporate office in Ball Ground, Georgia.
Added
Because Chart is global in nature, with substantial inter-segment cooperation, properties are often used by multiple business segments. Regulatory Environment We are subject to federal, state, and local regulations relating to the discharge of materials into the environment, production and handling of hazardous and regulated materials, and the conduct and condition of our production facilities.
Removed
Our major owned facilities in the United States are subject to mortgages securing our 2026 Credit Facilities. The following table summarizes information about our principal plants and other materially important physical properties as of January 31, 2023: Segment Location Ownership Use Cryo Tank Solutions/Specialty Products/Corporate Ball Ground, Georgia, U.S.
Removed
Leased Manufacturing/Office/Warehouse Corporate Hyderabad, India Leased Office Corporate Luxembourg, Luxembourg Leased Office Cryo Tank Solutions/Specialty Products Canton, Georgia, U.S. Owned Manufacturing/Office Cryo Tank Solutions/Heat Transfer Systems/Repair, Service & Leasing Milan, Italy Owned Manufacturing/Office Cryo Tank Solutions/Specialty Products Theodore, Alabama, U.S.
Removed
Owned Manufacturing/Office Cryo Tank Solutions/Specialty Products/Repair, Service & Leasing Andhra Pradesh, India Owned Manufacturing/Office Cryo Tank Solutions/Specialty Products/Repair, Service & Leasing Changzhou, China Leased/Owned Manufacturing/Office Cryo Tank Solutions/Specialty Products/Repair, Service & Leasing Decin, Czech Republic Leased/Owned Manufacturing/Office Cryo Tank Solutions/Specialty Products/Repair, Service & Leasing Goch, Germany Owned Manufacturing/Office Cryo Tank Solutions/Specialty Products/Repair, Service & Leasing Kuala Lumpur, Malaysia Leased Office Cryo Tank Solutions/Specialty Products/Repair, Service & Leasing Lery, France Owned Manufacturing/Office Cryo Tank Solutions/Specialty Products/Repair, Service & Leasing New Prague, Minnesota, U.S.
Removed
Leased/Owned Manufacturing/Office Heat Transfer Systems Pombia, Italy Leased Manufacturing/Office Heat Transfer Systems/Repair, Service & Leasing Beasley, Texas, U.S. Owned Manufacturing/Warehouse Heat Transfer Systems/Repair, Service & Leasing Tulsa, Oklahoma, U.S. Leased/Owned Manufacturing/Office Heat Transfer Systems/Specialty Products/Repair, Service & Leasing La Crosse, Wisconsin, U.S. Leased/Owned Manufacturing/Office/Warehouse Heat Transfer Systems/Specialty Products/Repair, Service & Leasing New Iberia, Louisiana, U.S.
Removed
Leased Manufacturing/Office Heat Transfer Systems/Specialty Products/Repair, Service & Leasing Valencia, California, U.S. Leased Manufacturing/Office Heat Transfer Systems/Specialty Products/Repair, Service & Leasing/Corporate The Woodlands, Texas, U.S. Leased Office Specialty Products Allentown , Pennsylvania, U.S. Owned Office Specialty Products Austin, Texas, U.S. Leased Manufacturing/Warehouse Specialty Products Duluth, Georgia, U.S. Leased Office Specialty Products Fayetteville, Arkansas, U.S.
Removed
Leased Office/Warehouse Specialty Products Haryana, India Leased Office Specialty Products Orem, Utah, U.S. Leased Manufacturing/Office Specialty Products Palmerton, Pennsylvania, U.S. Leased Office/Warehouse Repair, Service & Leasing Franklin, Indiana, U.S. Leased Manufacturing/Office/Service Repair, Service & Leasing Goteborg, Sweden Leased Manufacturing/Office/Service Repair, Service & Leasing Houston, Texas, U.S. Owned Manufacturing/Office/Service Repair, Service & Leasing Richburg, South Carolina, U.S.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

8 edited+1 added−8 removed0 unchanged
Biggest changeThe Company has taken a loss contingency accrual of $305.6 million and a related loss receivable of $231.9 million from insurance proceeds from these combined cases which are recognized in our consolidated balance sheet. The net loss of approximately $73.0 million is recognized in discontinued operations and represents the expected out-of-pocket, payments in connection with these settlements.
Biggest changeAs previously disclosed, the Company reached a settlement in late January 2023 to resolve these cases. In the fourth quarter of 2022, the Company recorded a loss contingency accrual of $305.6 and a related loss receivable of $231.9 from insurance proceeds from these combined cases, which were recognized in our consolidated balance sheet as of December 31, 2022.
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, management believes that the final resolution of these matters, including the Pacific Fertility Center cases described above, will not have a material adverse effect on our financial position, liquidity, cash flows, or results of operations, except that our results of operations for any particular reporting period may be adversely affected by any potential or actual loss that is accrued in such period.
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, management believes that the final resolution of these matters, including the sole remaining Pacific Fertility Center case described above, will not have a material adverse effect on our financial position, liquidity, cash flows, or results of operations, except that our results of operations for any particular reporting period may be adversely affected by any potential or actual loss that is accrued in such period.
Future developments may, however, result in resolution of these legal claims in a way that could have a material adverse effect. Item 4. Mine Safety Disclosures Not applicable. 24
Future developments may, however, result in resolution of these legal claims in a way that could have a material adverse effect. Item 4. Mine Safety Disclosures Not applicable. 22 PART II
We continue to evaluate the merits of the sole remaining lawsuit that is not included in the preliminary settlement in light of the information available. Based on the status of that lawsuit, a current estimate of rea sonably possible losses in that case cannot be made; however, the Company does not anticipate the potential exposure to be material.
We continue to evaluate the merits of the sole remaining lawsuit that was not included in the settlement in light of the information available. Based on the status of that lawsuit, a current estimate of reasonably possible losses in that case cannot be made; however, the Company does not anticipate the potential exposure to be material.
This preliminary settlement and the expected net out-of-pocket payments does not reflect third party recoveries which the Company will aggressively pursue with respect to the underlying facts in these cases, and which the Company currently anticipates will result in recoveries approximating one-quarter or more of the Company’s out-of-pocket, net payments.
This settlement and the net out-of-pocket payments do not reflect third-party recoveries which the Company is pursuing with respect to the underlying facts in these cases, and which the Company currently anticipates will result in recoveries approximating one-quarter or more of the Company’s out-of-pocket, net payments.
District Court for the Northern District of California) filed against Chart and other defendants with respect to the alleged failure of a stainless steel cryobiological storage tank (model MVE 808AF-GB) at the Pacific Fertility Center in San Francisco, California.
District Court for the Northern District of California and the San Francisco Superior Court during the second quarter of 2018 against Chart and other defendants with respect to the alleged failure of a stainless steel cryobiological storage tank at the Pacific Fertility Center in San Francisco, California.
Item 3. Legal Proceedings In connection with our divestiture of our Cryobiological business, Chart retained certain potential liabilities, including claims in connection with our following litigation. During the second quarter of 2018, Chart was named in lawsuits (including lawsuits filed in the U.S.
Item 3. Legal Proceedings In connection with our divestiture of our cryobiological products business on October 1, 2020, Chart retained certain potential liabilities, including claims in connection with lawsuits filed in the U.S.
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 incidental to the normal course of our business.
The Company does not intend to report on this lawsuit quarterly, absent developments that would impact the materiality of the claim. 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 incidental to the normal course of our business.
Removed
In May and June of 2021, the first five of the federal lawsuits went to trial, and on June 10, 2021, the jury reached a verdict against Chart in favor of the plaintiffs in those lawsuits in the amount of $14.9 million, of which 90% ($13.5 million) is attributable to Chart.
Added
The net loss of approximately $73.0 was recognized in discontinued operations and represented the expected out-of-pocket payments in connection with these settlements. The settlement was finalized and funded on March 20, 2023; therefore the previously disclosed loss contingency accrual and related loss receivable are no longer recorded as of December 31, 2023.
Removed
Subsequent to the initial verdict, the Company filed various post-trial motions and appeals based on various factors, including the Company’s belief that the allocation of fault was not supported by the record, the award of emotional distress damages, the exclusion of certain evidence of trial, and our contention that plaintiffs failed to present sufficient evidence to prove each element of their claim.
Removed
In the second quarter 2021, we recorded a loss contingency accrual and corresponding charge to net income for $13.5 million in the amount of the jury verdict attributable to Chart, with an offsetting $13.5 million loss recovery receivable for anticipated insurance proceeds, with a corresponding credit to net income.
Removed
On June 13, 2022, Starr Indemnity & Liability Company (“Starr”) filed a complaint for declaratory relief and reimbursement in the U.S. District Court for the Northern District of California seeking a determination of what obligation, if any, Starr has to indemnify Chart in connection with the Pacific Fertility Center actions.
Removed
On June 14, 2022, Chart filed its own declaratory judgment action against Starr in the U.S. District Court for the Northern District of Georgia seeking a determination that Starr has a duty to indemnify the Company in connection with the Pacific Fertility Center actions.
Removed
As previously disclosed, the Company has been engaged in ongoing discussions in an effort to establish a settlement framework for the various lawsuits (both in the U.S. District Court for the Northern District of California, as well as the San Francisco Superior Court) associated with the Pacific Fertility Center.
Removed
After substantial discussions with the various constituent parties, the Company reached a preliminary settlement in late January 2023 to resolve these 217 cases .
Removed
This preliminary settlement will resolve the prior verdict for the initially tried cases, which is on appeal, as well as the previously disclosed Starr insurance dispute, and remains subject to the satisfaction of certain conditions, which the Company currently anticipates occurring as early as March 2023.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+4 added−1 removed4 unchanged
Biggest changeThe Peer Group Index is comprised of Air Products and Chemicals, Inc., Baker Hughes Company, Barnes Group Inc., ChampionX Corporation, Cheniere Energy, Inc., CIMC Enric Holdings Limited, CNH Industrial N.V., EnPro Industries, Inc., ESCO Technologies Inc., Franklin Electric Co., Inc., Harsco Corporation, IDEX Corporation, ITT Inc., New Fortress Energy LLC, NIKKISO CO., LTD., Plug Power Inc., SPX Corporation and Worthington Industries, Inc. 26 Purchases of Equity Securities by the Issuer and Affiliated Purchasers Issuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid Per Share (1) Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1 — 31, 2022 10 $ 196.77 — $ — November 1 — 30, 2022 1,123 129.00 — — December 1 — 31, 2022 — — — — Total 1,133 $ 129.56 — $ — _______________ (1) Includes shares of common stock surrendered to us during the fourth quarter of 2022 by participants under our share-based compensation plans to satisfy tax withholding obligations relating to the vesting or payment of equity awards for an aggregate purchase price of approximately $146,800.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Issuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid Per Share (1) Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1 — 31, 2023 — $ — — $ — November 1 — 30, 2023 13 127.28 — — December 1 — 31, 2023 51 130.16 — — Total 64 $ 129.58 — $ — _______________ (1) Includes shares of common stock surrendered to us during the fourth quarter of 2023 by participants under our share-based compensation plans to satisfy tax withholding obligations relating to the vesting or payment of equity awards for an aggregate purchase price of approximately $8,300.
Cumulative Total Return Comparison Set forth below is a line graph comparing the cumulative total return of a hypothetical investment in the shares of common stock of Chart with the cumulative return of a hypothetical investment in each of the S&P SmallCap 600 Index and our Peer Group Index based on the respective market prices of each such investment on the dates shown below, assuming an initial investment of $100 on December 31, 2017, including reinvestment of dividends, if any.
Cumulative Total Return Comparison Set forth below is a line graph comparing the cumulative total return of a hypothetical investment in the shares of common stock of Chart with the cumulative return of a hypothetical investment in each of the S&P MidCap 400 Index, S&P SmallCap 600 Index and our current and previous Peer Group Indexes based on the respective market prices of each such investment on the dates shown below, assuming an initial investment of $100 on December 31, 2018, including reinvestment of dividends, if any.
The total number of shares repurchased represents the net shares issued to satisfy tax withholding. All such repurchased shares were subsequently retired during the three months ended December 31, 2022. Item 6. [Reserved] 27
The total number of shares repurchased represents the net shares issued to satisfy tax withholding. All such repurchased shares were subsequently retired during the three months ended December 31, 2023. Item 6. [Reserved] 24
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Chart’s common stock is traded on the New York Stock Exchange under the symbol “GTLS.” As of February 1, 2023, there were 180 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Chart’s common stock is traded on the New York Stock Exchange under the symbol “GTLS.” As of January 31, 2024, there were 203 holders of record of our common stock.
These criteria result in an index composed of oil field equipment/service and other comparable industrial companies.
During 2023, we transitioned from the S&P SmallCap 600 Index to the S&P MidCap 400 Index, which better aligns to the performance of our peers. 23 We select the peer companies that comprise the Peer Group Index solely on the basis of objective criteria. These criteria result in an index composed of oil field equipment/service and other comparable industrial companies.
Removed
December 31, 2017 2018 2019 2020 2021 2022 Chart Industries, Inc. $ 100.00 $ 138.78 $ 144.02 $ 251.37 $ 340.35 $ 245.90 S&P SmallCap 600 Index 100.00 91.48 112.28 124.90 158.30 132.74 Peer Group Index 100.00 90.10 119.62 143.10 164.48 171.09 We select the peer companies that comprise the Peer Group Index solely on the basis of objective criteria.
Added
December 31, 2018 2019 2020 2021 2022 2023 Chart Industries, Inc. $ 100.00 $ 103.78 $ 181.13 $ 245.26 $ 177.20 $ 209.64 S&P MidCap 400 Index 100.00 126.17 143.39 178.85 155.42 180.90 S&P SmallCap 600 Index 100.00 122.74 136.53 173.04 145.10 168.23 Peer Group Index - Current 100.00 132.76 158.82 182.55 189.89 193.52 Peer Group Index - Previous 100.00 138.62 166.22 191.85 200.96 203.79 The cumulative total return comparison presents both the S&P MidCap 400 Index and S&P SmallCap 600 Index.
Added
During 2023, we modified our peer group to include certain competitors of Howden. The cumulative total return comparison presents both the current and previous Peer Group Index.
Added
The current Peer Group Index is comprised of Air Products and Chemicals, Inc., Atlas Copco AB, Baker Hughes Company, Barnes Group Inc., Burckhardt Compression Holding AG, ChampionX Corporation, Cheniere Energy, Inc., CIMC Enric Holdings Limited, CNH Industrial N.V., EnPro Inc., ESCO Technologies Inc., Franklin Electric Co., Inc., IDEX Corporation, ITT Inc., New Fortress Energy LLC, NIKKISO CO., LTD., Plug Power Inc., SPX Corporation and Worthington Enterprises, Inc.
Added
The previous Peer Group Index is comprised of Air Products and Chemicals, Inc., Baker Hughes Company, Barnes Group Inc., ChampionX Corporation, Cheniere Energy, Inc., CIMC Enric Holdings Limited, CNH Industrial N.V., EnPro Inc., ESCO Technologies Inc., Franklin Electric Co., Inc., Harsco Corporation, IDEX Corporation, ITT Inc., New Fortress Energy LLC, NIKKISO CO., LTD., Plug Power Inc., SPX Corporation and Worthington Enterprises, Inc.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

119 edited+52 added−64 removed80 unchanged
Biggest changeSelected Segment Financial Information Year Ended December 31, 2022 2021 2020 Sales Cryo Tank Solutions $ 504.3 $ 447.4 $ 415.8 Heat Transfer Systems 462.7 262.7 369.8 Specialty Products 448.3 432.9 242.6 Repair, Service & Leasing 209.6 187.0 158.3 Intersegment eliminations (12.5) (12.3) (9.4) Consolidated $ 1,612.4 $ 1,317.7 $ 1,177.1 Gross Profit Cryo Tank Solutions $ 98.7 $ 93.5 $ 99.5 Heat Transfer Systems 90.6 35.6 93.7 Specialty Products 138.6 145.5 84.3 Repair, Service & Leasing 79.5 49.6 54.6 Consolidated $ 407.4 $ 324.2 $ 332.1 Gross Profit Margin Cryo Tank Solutions 19.6 % 20.9 % 23.9 % Heat Transfer Systems 19.6 % 13.6 % 25.3 % Specialty Products 30.9 % 33.6 % 34.7 % Repair, Service & Leasing 37.9 % 26.5 % 34.5 % Consolidated 25.3 % 24.6 % 28.2 % SG&A Expenses Cryo Tank Solutions $ 41.8 $ 38.1 $ 41.7 Heat Transfer Systems 24.0 28.1 36.6 Specialty Products 55.6 43.3 22.2 Repair, Service & Leasing 15.2 17.8 15.3 Corporate 77.9 69.5 62.4 Consolidated $ 214.5 $ 196.8 $ 178.2 SG&A Expenses (% of Sales) Cryo Tank Solutions 8.3 % 8.5 % 10.0 % Heat Transfer Systems 5.2 % 10.7 % 9.9 % Specialty Products 12.4 % 10.0 % 9.2 % Repair, Service & Leasing 7.3 % 9.5 % 9.7 % Consolidated 13.3 % 14.9 % 15.1 % Operating Income (Loss) (1) Cryo Tank Solutions $ 54.0 $ 52.9 $ 52.5 Heat Transfer Systems (2) 51.7 (12.3) 11.2 Specialty Products 72.9 94.1 60.7 Repair, Service & Leasing 51.0 23.3 30.3 Corporate (3) (78.1) (69.5) (62.5) Consolidated $ 151.5 $ 88.5 $ 92.2 32 Operating Margin Cryo Tank Solutions 10.7 % 11.8 % 12.6 % Heat Transfer Systems 11.2 % (4.7) % 3.0 % Specialty Products 16.3 % 21.7 % 25.0 % Repair, Service & Leasing 24.3 % 12.5 % 19.1 % Consolidated 9.4 % 6.7 % 7.8 % _______________ (1) Restructuring (credits)/charges for the years ended: • December 31, 2022 were $(1.0) ($0.1 – Cryo Tank Solutions, $0.3 – Heat Transfer Systems and $(1.4) – Repair, Service & Leasing); • December 31, 2021 were $3.5 ($0.3 – Cryo Tank Solutions, $1.7 – Heat Transfer Systems, $1.5 – Repair, Service & Leasing); and • 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).
Biggest changeSelected Segment Financial Information Year Ended December 31, 2023 2022 2021 Sales Cryo Tank Solutions $ 640.8 $ 504.3 $ 447.4 Heat Transfer Systems 891.2 462.7 262.7 Specialty Products 819.9 448.3 432.9 Repair, Service & Leasing 1,029.2 209.6 187.0 Intersegment eliminations (28.6) (12.5) (12.3) Consolidated $ 3,352.5 $ 1,612.4 $ 1,317.7 Gross Profit Cryo Tank Solutions $ 132.0 $ 98.7 $ 93.5 Heat Transfer Systems 246.8 90.6 35.6 Specialty Products 221.4 138.6 145.5 Repair, Service & Leasing 440.2 79.5 49.6 Consolidated $ 1,040.4 $ 407.4 $ 324.2 Gross Profit Margin Cryo Tank Solutions 20.6 % 19.6 % 20.9 % Heat Transfer Systems 27.7 % 19.6 % 13.6 % Specialty Products 27.0 % 30.9 % 33.6 % Repair, Service & Leasing 42.8 % 37.9 % 26.5 % Consolidated 31.0 % 25.3 % 24.6 % SG&A Expenses Cryo Tank Solutions $ 70.9 $ 41.8 $ 38.1 Heat Transfer Systems 54.1 24.0 28.1 Specialty Products 82.6 55.6 43.3 Repair, Service & Leasing 116.1 15.2 17.8 Corporate 162.6 77.9 69.5 Consolidated $ 486.3 $ 214.5 $ 196.8 SG&A Expenses (% of Sales) Cryo Tank Solutions 11.1 % 8.3 % 8.5 % Heat Transfer Systems 6.1 % 5.2 % 10.7 % Specialty Products 10.1 % 12.4 % 10.0 % Repair, Service & Leasing 11.3 % 7.3 % 9.5 % Consolidated 14.5 % 13.3 % 14.9 % Operating Income (Loss) (1) Cryo Tank Solutions $ 54.5 $ 54.0 $ 52.9 Heat Transfer Systems (2) 175.8 51.7 (12.3) Specialty Products 119.7 72.9 94.1 Repair, Service & Leasing 203.3 51.0 23.3 Corporate (162.6) (78.1) (69.5) Consolidated $ 390.7 $ 151.5 $ 88.5 29 Operating Margin Cryo Tank Solutions 8.5 % 10.7 % 11.8 % Heat Transfer Systems 19.7 % 11.2 % (4.7) % Specialty Products 14.6 % 16.3 % 21.7 % Repair, Service & Leasing 19.8 % 24.3 % 12.5 % Consolidated 11.7 % 9.4 % 6.7 % _______________ (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).
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 periods was primarily driven by fluctuations in the U.S dollar as compared to the euro and Chinese yuan.
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.
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.
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.
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 46 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.
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.
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 pending Howden acquisition to pay down a portion of our senior secured revolving credit facility.
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.
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”).
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 41 amount, including goodwill (the “Step 0 Test”).
We are 44 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.
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.
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 and the related margin was mainly driven by overall product and project volume mix.
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.
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.
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 42 identifiable cash flows are available, and we perform the required analysis and record impairment charges if applicable.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” among others, could affect our future performance and liquidity 48 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.
“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.
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.
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.
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, 47 price, or both.
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.
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. 49
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.
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.
In some cases, forward-looking 44 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.
Heat Transfer Systems—Results of Operations for the Years Ended December 31, 2022 and 2021 Year Ended December 31, 2022 vs. 2021 2022 2021 Variance ($) Variance (%) Sales $ 462.7 $ 262.7 $ 200.0 76.1 % Gross Profit 90.6 35.6 55.0 154.5 % Gross Profit Margin 19.6 % 13.6 % SG&A Expenses $ 24.0 $ 28.1 $ (4.1) (14.6) % SG&A Expenses (% of Sales) 5.2 % 10.7 % Operating Income (Loss) $ 51.7 $ (12.3) $ 64.0 (520.3) % Operating Margin 11.2 % (4.7) % Heat Transfer Systems segment sales increased by $200.0 million during 2022 as compared to 2021 to a record $462.7 million.
Heat Transfer Systems—Results of Operations for the Years Ended December 31, 2022 and 2021 Year Ended December 31, 2022 vs. 2021 2022 2021 Variance ($) Variance (%) Sales $ 462.7 $ 262.7 $ 200.0 76.1 % Gross Profit 90.6 35.6 55.0 154.5 % Gross Profit Margin 19.6 % 13.6 % SG&A Expenses $ 24.0 $ 28.1 $ (4.1) (14.6) % SG&A Expenses (% of Sales) 5.2 % 10.7 % Operating Income $ 51.7 $ (12.3) $ 64.0 (520.3) % Operating Margin 11.2 % (4.7) % Heat Transfer Systems segment sales increased by $200.0 million during 2022 as compared to 2021.
This Annual Report includes “forward-looking statements.” These forward-looking statements include statements relating to our business, including statements regarding completed and pending acquisitions and investments and related accretion or statements with respect to the use of proceeds or redeployment of capital from recent or planned divestitures, as well statements 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, 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.
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.
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 45 impaired, and no further testing is required.
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.
Consolidated SG&A expenses increased by $17.7 million or 9.0% ($8.9 million organically) 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.
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.
As of October 1, 2022 and 2021 (“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.
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.
Heat Transfer Systems segment orders for 2022 were a record $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 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.
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, a record high, compared to $346.8 million as of December 31, 2021, an increase of $24.2 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.
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.
The in crease 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.
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.
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 hydr ogen and helium orders of $282.1 million that included four liquefaction orders totaling approximately $150.0 million.
The increase was primarily driven by higher order intake within lifecycle services, aftermarket fans 41 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.
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.
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.
Interest expense, ne t 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.
Acquisition Related Finance Fees Acquisition related finance fees for the year ended December 31, 2022 were $37.0 million related to financing for our pending Acquisition of Howden. There were no acquisition related finance fees for the year ended December 31, 2021.
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.
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, an increase of $207.7 million. Repair, Service & Leasing segment orders for 2022 were a record $218.9 million compared to $180.6 million in 2021, an increase of $38.3 million.
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.
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.
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.
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.
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.
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 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.
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 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 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 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.
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.
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 33 due 2024.
Interest expense, net for the year ended December 31, 2022 and 2021 i ncluded $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.
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.
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.
We also captured clean power, clean water, clean food and clean industrials as our unique offering for the Nexus of Clean TM . 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.
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.
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, an increase of $929.7 million. Specialty Products segment orders for 2022 were a record $665.5 million compared to $648.6 million for 2021, an increase of $16.9 million.
He at 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.
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% due primarily to tax benefits associated with the 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 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.
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 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.
During 2020, we recorded an impairment loss of $16.0 million to our AXC Intangible Asset. 38 Specialty Products—Results of Operations for the Years Ended December 31, 2022 and 2021 Year Ended December 31, 2022 vs. 2021 2022 2021 Variance ($) Variance (%) Sales $ 448.3 $ 432.9 $ 15.4 3.6 % Gross Profit 138.6 145.5 (6.9) (4.7) % Gross Profit Margin 30.9 % 33.6 % SG&A Expenses $ 55.6 $ 43.3 $ 12.3 28.4 % SG&A Expenses (% of Sales) 12.4 % 10.0 % Operating Income $ 72.9 $ 94.1 $ (21.2) (22.5) % Operating Margin 16.3 % 21.7 % Specialty Products segment sales increased by $15.4 million during 2022 as compared to 2021 to a record $448.3 million.
Specialty Products—Results of Operations for the Years Ended December 31, 2022 and 2021 Year Ended December 31, 2022 vs. 2021 2022 2021 Variance ($) Variance (%) Sales $ 448.3 $ 432.9 $ 15.4 3.6 % Gross Profit 138.6 145.5 (6.9) (4.7) % Gross Profit Margin 30.9 % 33.6 % SG&A Expenses $ 55.6 $ 43.3 $ 12.3 28.4 % SG&A Expenses (% of Sales) 12.4 % 10.0 % Operating Income $ 72.9 $ 94.1 $ (21.2) (22.5) % Operating Margin 16.3 % 21.7 % Specialty Products segment sales increased by $15.4 million during 2022 as compared to 2021 to $448.3 million.
Furthermore, Specialty Products segment SG&A expenses included $1.1 million relative to acquisition-related contingent consideration adjustments recognized during 2021. 39 Repair, Service & Leasing—Results of Operations for the Years Ended December 31, 2022 and 2021 Year Ended December 31, 2022 vs. 2021 2022 2021 Variance ($) Variance (%) Sales $ 209.6 $ 187.0 $ 22.6 12.1 % Gross Profit 79.5 49.6 29.9 60.3 % Gross Profit Margin 37.9 % 26.5 % SG&A Expenses $ 15.2 $ 17.8 $ (2.6) (14.6) % SG&A Expenses (% of Sales) 7.3 % 9.5 % Operating Income $ 51.0 $ 23.3 $ 27.7 118.9 % Operating Margin 24.3 % 12.5 % Repair, Service & Leasing segment sales increased by $22.6 million during 2022 as compared to 2021 to a record $209.6 million.
Repair, Service & Leasing—Results of Operations for the Years Ended December 31, 2022 and 2021 Year Ended December 31, 2022 vs. 2021 2022 2021 Variance ($) Variance (%) Sales $ 209.6 $ 187.0 $ 22.6 12.1 % Gross Profit 79.5 49.6 29.9 60.3 % Gross Profit Margin 37.9 % 26.5 % SG&A Expenses $ 15.2 $ 17.8 $ (2.6) (14.6) % SG&A Expenses (% of Sales) 7.3 % 9.5 % Operating Income $ 51.0 $ 23.3 $ 27.7 118.9 % Operating Margin 24.3 % 12.5 % Repair, Service & Leasing segment sales increased by $22.6 million during 2022 as compared to 2021.
Cryo Tank Solutions—Results of Operations for the Years Ended December 31, 2021 and 2020 Year Ended December 31, 2021 vs. 2020 2021 2020 Variance ($) Variance (%) Sales $ 447.4 $ 415.8 $ 31.6 7.6 % Gross Profit 93.5 99.5 (6.0) (6.0) % Gross Profit Margin 20.9 % 23.9 % SG&A Expenses $ 38.1 $ 41.7 $ (3.6) (8.6) % SG&A Expenses (% of Sales) 8.5 % 10.0 % Operating Income $ 52.9 $ 52.5 $ 0.4 0.8 % Operating Margin 11.8 % 12.6 % Cryo Tank Solutions segment sales increased by $31.6 million during 2021 as compared to 2020.
Cryo Tank Solutions—Results of Operations for the Years Ended December 31, 2022 and 2021 Year Ended December 31, 2022 vs. 2021 2022 2021 Variance ($) Variance (%) Sales $ 504.3 $ 447.4 $ 56.9 12.7 % Gross Profit 98.7 93.5 5.2 5.6 % Gross Profit Margin 19.6 % 20.9 % SG&A Expenses $ 41.8 $ 38.1 $ 3.7 9.7 % SG&A Expenses (% of Sales) 8.3 % 8.5 % Operating Income $ 54.0 $ 52.9 $ 1.1 2.1 % Operating Margin 10.7 % 11.8 % Cryo Tank Solutions segment sales increased by $56.9 million during 2022 as compared to 2021.
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.
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.
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.
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.
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.
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.
Cryo Tank Solutions SG&A expenses increased during 2022 as compared to 2021 while SG&A expenses as a percentage of sales improved by 20 basis points. The increase in SG&A expenses was mainly due to higher employee-related costs.
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.
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 segment SG&A expenses decreased during 2021 as compared to 2020.
The decrease in gross profit and gross profit margin was mainly driven by higher material prices and higher labor costs due to macroeconomic conditions. 34 Cryo Tank Solutions segment SG&A expenses increased by $3.7 million during 2022 as compared to 2021.
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.
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.
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. 42 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.
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.
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.
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 $19.7 million unrealized loss on the mark-to-market adjustment of our investment in McPhy. 32 Realized Gain on Investment In Equity Securities On December 14, 2021 we completed the acquisition of the remaining 85% of the shares of Earthly Labs.
The following tables include key metrics used to evaluate our business and measure our performance and represents selected financial data for our operating segments for the years ended December 31, 2022, 2021 and 2020 (dollars in millions): Cryo Tank Solutions—Results of Operations for the Years Ended December 31, 2022 and 2021 Year Ended December 31, 2022 vs. 2021 2022 2021 Variance ($) Variance (%) Sales $ 504.3 $ 447.4 $ 56.9 12.7 % Gross Profit 98.7 93.5 5.2 5.6 % Gross Profit Margin 19.6 % 20.9 % SG&A Expenses $ 41.8 $ 38.1 $ 3.7 9.7 % SG&A Expenses (% of Sales) 8.3 % 8.5 % Operating Income $ 54.0 $ 52.9 $ 1.1 2.1 % Operating Margin 10.7 % 11.8 % Cryo Tank Solutions segment sales increased by $56.9 million during 2022 as compared to 2021 to a record $504.3 million.
The following tables include key metrics used to evaluate our business and measure our performance and represents selected financial data for our operating segments for the years ended December 31, 2023, 2022 and 2021 (dollar amounts in millions): Cryo Tank Solutions—Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, 2023 vs. 2022 2023 2022 Variance ($) Variance (%) Sales $ 640.8 $ 504.3 $ 136.5 27.1 % Gross Profit 132.0 98.7 33.3 33.7 % Gross Profit Margin 20.6 % 19.6 % SG&A Expenses $ 70.9 $ 41.8 $ 29.1 69.6 % SG&A Expenses (% of Sales) 11.1 % 8.3 % Operating Income $ 54.5 $ 54.0 $ 0.5 0.9 % Operating Margin 8.5 % 10.7 % Cryo Tank Solutions segment sales increased by $136.5 million during 2023 as compared to 2022 to $640.8 million.
Unrealized Gain 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.
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.
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.
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.
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.
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.
(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.
(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 ye ars ended December 31, 2023 and 2022.
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.
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.
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 and SG&A expenses as a percentage of sales improved by 550 basis points. The decrease in SG&A expenses was mainly due to lower employee-related costs.
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 tables below represent orders received and backlog by segment for the periods indicated (dollar amounts in millions): Year Ended December 31, 2022 2021 2020 Orders Cryo Tank Solutions $ 508.4 $ 555.4 $ 417.5 Heat Transfer Systems 1,417.6 312.0 331.1 Specialty Products 665.5 648.6 279.2 Repair, Service & Leasing 218.9 180.6 196.8 Intersegment eliminations (30.5) (20.5) (14.5) Consolidated $ 2,779.9 $ 1,676.1 $ 1,210.1 As of December 31, 2022 2021 2020 Backlog Cryo Tank Solutions $ 371.0 $ 346.8 $ 222.6 Heat Transfer Systems 1,300.1 370.4 329.2 Specialty Products 645.9 438.2 199.7 Repair, Service & Leasing 57.0 56.5 63.1 Intersegment eliminations (35.9) (21.8) (4.6) Consolidated $ 2,338.1 $ 1,190.1 $ 810.0 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.
The tables below represent orders received and backlog by segment for the periods indicated (dollar amounts in millions): Year Ended December 31, 2023 2022 2021 Orders Cryo Tank Solutions $ 608.8 $ 508.4 $ 555.4 Heat Transfer Systems 1,114.2 1,417.6 312.0 Specialty Products 1,341.6 665.5 648.6 Repair, Service & Leasing 1,100.8 218.9 180.6 Intersegment eliminations (25.2) (30.5) (20.5) Consolidated $ 4,140.2 $ 2,779.9 $ 1,676.1 As of December 31, 2023 2022 2021 Backlog Cryo Tank Solutions $ 361.9 $ 371.0 $ 346.8 Heat Transfer Systems 1,716.5 1,300.1 370.4 Specialty Products 1,631.1 645.9 438.2 Repair, Service & Leasing 587.9 57.0 56.5 Intersegment eliminations (18.6) (35.9) (21.8) Consolidated $ 4,278.8 $ 2,338.1 $ 1,190.1 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.
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%.
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%.
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.
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.
Liquidity and Capital Resources In connection with the funding of the proposed Howden acquisition, we entered into a revised and expanded senior secured revolving credit facility and issued new senior secured notes due 2030 and senior unsecured notes due 2031.
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.
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.
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 rang e of $115.0 million to $125.0 million.
Our backlog as of December 31, 2022, 2021 and 2020 was $2,338.1 million, $1,190.1 million and $810.0 million, respectively.
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.
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.
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.
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.
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.
Corporate SG&A expenses increased by $7.1 million during 2021 as compared to 2020 mainly due to higher 40 share-based compensation expense, information technology costs and legal fees partially offset by lower employee-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.
Corporate SG&A expenses increased by $8.4 million during 2022 as compared to 2021 mainly due to higher employee-related costs. 37 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.
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, 2022 which includes Earthly Labs and Fronti Fabrications, Inc (together, the “recently acquired trade names”).
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.
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 improved by 220 basis points as a result of large aftermarket sales without incremental SG&A.
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.
As previously mentioned in the results of operations section above, t he 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 as compared to 2021, and gross profit margin increased by 600 basis points.
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 g ross profit margin increased by 600 basis points driven by lower volume, partially offset by lower restructuring costs.
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. 30 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): 2022 2021 2020 Sales 100.0 % 100.0 % 100.0 % Cost of sales (1) 74.7 75.4 71.8 Gross profit 25.3 24.6 28.2 Selling, general and administrative expenses (2) - (4) 13.3 14.9 15.1 Amortization expense 2.6 3.0 3.9 Asset impairments (5) — — 1.4 Operating income 9.4 6.7 7.8 Acquisition related finance fees 2.3 — — Interest expense, net 1.8 0.8 1.5 Financing costs amortization (6) 0.2 0.6 0.4 Unrealized gain on investment in equity securities (0.8) (0.2) (1.1) Realized gain on investment in equity securities — (0.2) — Foreign currency loss — 0.1 0.1 Gain on bargain purchase — — (0.4) Other (income) expense (0.1) — 0.2 Income tax expense, net 1.0 1.0 1.3 Net income from continuing operations 5.1 4.6 6.0 Income from discontinued operations, net of tax (3.6) — 20.3 Net income 1.6 4.6 26.3 Income attributable to noncontrolling interests, net of taxes 0.1 0.1 0.1 Net income attributable to Chart Industries, Inc. 1.5 4.5 26.2 _______________ (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.
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. 27 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: 2023 2022 2021 Sales 100.0 % 100.0 % 100.0 % Cost of sales (1) 69.0 74.7 75.4 Gross profit 31.0 25.3 24.6 Selling, general and administrative expenses (2)-(4) 14.5 13.3 14.9 Amortization expense 4.9 2.6 3.0 Operating income 11.7 9.4 6.7 Acquisition related finance fees 0.8 2.3 — Interest expense, net 8.1 1.8 0.8 Financing costs amortization (5) 0.5 0.2 0.6 Loss on extinguishment of debt 0.2 — — Unrealized loss (gain) on investment in equity securities 0.4 (0.8) (0.2) Realized gain on investment in equity securities — — (0.2) Foreign currency (gain) loss (0.1) — 0.1 Other (income) expense, net — (0.1) — Income tax expense, net 0.1 1.0 1.0 Net income from continuing operations 1.7 5.1 4.6 Loss from discontinued operations, net of tax — (3.6) — Net income 1.7 1.6 4.6 Less: Income attributable to noncontrolling interests of continuing operations, net of taxes 0.3 0.1 0.1 Net income attributable to Chart Industries 1.4 1.5 4.5 _______________ (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.
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.
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.
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.
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.
The increase in gross profit and 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.
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.
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 April 1, June 7 and July 8, 2022 cross-currency swaps. See below for discussion regarding the composition of cash provided by investing activities during 2021.
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.
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.
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.
Our foreign subsidiaries held cash of approximately $66.7 million and $91.2 million at December 31, 2022 and 2021, 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.
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.
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.
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.
We also received $11.0 million in proceeds from stock option exercises during 2020. Cash Requirements We do not currently anticipate any unusual cash requirements for working capital needs for the year ending December 31, 2023 relating to our existing business.
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.
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 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.
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, as compared to $417.5 million for 2020, an increase of $137.9 million.
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. 38 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.
Cryo Tank Solutions segment gross profit increased by $5.2 million during 2022 as compared to 2021 primarily due to higher volume, while gross profit margin decreased by 130 basis points. The decrease in gross profit margin was mainly driven by higher material prices and higher labor costs due to macroeconomic conditions.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+3 added−0 removed4 unchanged
Biggest changeTranslation exposure is primarily with the euro, the Czech koruna, the Chinese yuan and the Indian rupee. During 2022, the Czech koruna, euro, Chinese yuan and the Indian rupee increased in relation to the U.S. dollar by less than 15%. At December 31, 2022, a hypothetical further 10% strengthening of the U.S. dollar would not materially affect our financial statements.
Biggest changeThere was no notable movement between the U.S. dollar and the Indian rupee or Czech koruna. At December 31, 2023, a hypothetical further 10% strengthening of the U.S. dollar would not materially affect our financial statements.
As disclosed in Note 10, “Debt and Credit Arrangements,” we purchased an out-of-the-money protective call while writing a put option with a strike price at which the premium received is equal to the premium of the protective call purchased, which involved no initial capital outlay.
As disclosed in Note 10, “Debt and Credit Arrangements,” we have an out-of-the-money protective call while writing a put option with a strike price at which the premium received is equal to the premium of the protective call purchased, which involved no initial capital outlay.
The financial statements of foreign subsidiaries are translated into their U.S. dollar equivalents at end-of-period exchange rates for assets and liabilities, while income and expenses are translated at average monthly exchange rates. Translation gains and losses are components of other comprehensive loss as reported in the consolidated statements of comprehensive income.
The financial statements of foreign subsidiaries are translated into their U.S. dollar equivalents at end-of-period exchange rates for assets and liabilities, while income and expenses are translated at average monthly exchange rates. Translation gains and losses are components of other comprehensive income as reported in the consolidated statements of income and comprehensive income.
The strike price of the warrant transactions related to the 2024 Notes was initially $71.775 per share. Further information is located 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. 50
The strike price of the warrant transactions related to the 2024 Notes was initially $71.775 per share. Further information is located 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. 46
EUR Revolver Borrowings: Assuming no changes in the 98.0 million euros in EUR Revolver Borrowings outstanding under the senior secured revolving credit facility due October 2026 and an additional 100 basis points (1 percent) strengthening in the U.S dollar in relation to the euro as of the beginning of 2022, during the year ended December 31, 2022, our additional unrealized foreign currency gain would be approximately $1.1 million on a pre-tax basis.
EUR Revolver Borrowings: Additionally, assuming no changes in the euro 88.5 million in EUR Revolver Borrowings outstanding under the senior secured revolving credit facility due October 2026 and an additional 100 basis points (1 percent) strengthening in the U.S. dollar in relation to the euro as of the beginning of 2023, during the year ended December 31, 2023, our additional unrealized foreign currency gain would be approximately $1.0 million on a pre-tax basis.
If interest rates were to increase 100 basis points (1 percent) from the weighted-average interest rate of 3.4% at December 31, 2022, and assuming no changes in the $104.5 million of borrowings outstanding under the senior secured revolving credit facility due October 2026 at December 31, 2022, our additional annual expense would be approximately $1.0 million on a pre-tax basis.
If interest rates were to increase 100 basis points (1 percent) from the weighted-average interest rate of 6.2% at December 31, 2023, and assuming no changes in the $102.8 million of borrowings outstanding under the senior secured revolving credit facility due October 2026 at December 31, 2023, our additional annual expense would be approximately $1.0 million on a pre-tax basis.
Transaction Gains and Losses: Chart’s primary transaction exchange rate exposures are with the euro, the Chinese yuan, the Czech koruna, the Indian rupee, the Australian dollar, the British pound, the Canadian dollar and the Japanese yen.
Transaction Gains and Losses: Chart’s primary transaction exchange rate exposures are with the euro, the Chinese yuan, the Czech koruna, the Indian rupee, the Australian dollar, the British pound, the Canadian dollar and the South African rand.
Interest Rate Risk: Our primary interest rate risk exposure results from various floating rate pricing mechanisms contained in our senior secured revolving credit facility due October 2026.
Interest Rate Risk: Our primary interest rate risk exposure results from various floating rate pricing mechanisms contained in our senior secured revolving credit facility due October 2026 and term loans due March 2030.
Transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency are recognized in the consolidated statements of income as a component of foreign currency (gain) loss. Derivative Instruments: We enter into foreign exchange forward contracts to hedge anticipated and firmly committed foreign currency transactions.
Transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency are recognized in the consolidated statements of income and comprehensive income as a component of foreign currency gain. 45 Derivative Instruments: We enter into foreign currency contracts not designated as hedging instruments to mitigate foreign currency risk for anticipated and firmly committed foreign currency transactions.
Market Price Sensitive Instruments In connection with the pricing of the 2024 Notes, we entered into privately negotiated convertible note hedge transactions (the “Note Hedge Transactions”) with certain parties, including affiliates of the initial purchasers of the 2024 Notes (the “Option Counterparties”).
Market Price Sensitive Instruments In connection with the pricing of the 2024 Notes, we entered into privately negotiated convertible note hedge transactions (the “Note Hedge Transactions”) with certain parties, including affiliates of the initial purchasers of the 2024 Notes (the “Option Counterparties”) which relate to 4.41 million shares of our common stock and represents the number of shares of our common stock underlying the 2024 Notes.
These Note Hedge Transactions are expected to reduce the potential dilution upon any future conversion of the 2024 Notes. We also entered into separate, privately negotiated warrant transactions with the Option Counterparties to acquire up to 4.41 million shares of our common stock.
We also entered into separate, privately negotiated warrant transactions with the Option Counterparties to acquire up to 4.41 million shares of our common stock.
The call was structured with a strike price higher than our cost basis in such investments, thereby limiting any foreign exchange losses to approximately $11.4 million on a pre-tax basis.
The call was structured with a strike price higher than our cost basis in such investments, thereby limiting any foreign exchange losses to approximately $11.4 million on a pre-tax basis. We do not use derivative financial instruments for speculative or trading purposes. The terms of the contracts are generally one to three years.
We do not use derivative financial instruments for speculative or trading purposes. The terms of the contracts are generally one year or less. At December 31, 2022, a hypothetical 10% weakening of the U.S. dollar would not materially affect our outstanding foreign exchange forward contracts.
At December 31, 2023, a hypothetical 10% weakening of the U.S. dollar would not materially affect our outstanding foreign exchange forward contracts.
Added
If interest rates were to increase 100 basis points (1 percent) from the interest rate for our term loan of 8.7% at December 31, 2023, and assuming no changes in the $1,631.0 million of borrowings outstanding under the term loan at December 31, 2023, our additional annual expense would be approximately $16.3 million on a pre-tax basis.
Added
Translation exposure is primarily with the euro, the Czech koruna, the Chinese yuan, the South African rand, the British pound and the Indian rupee. During 2023, the U.S. dollar strengthened in relation to the South African rand by 9% and Chinese yuan by 2%, and weakened in relation to the British pound by 5% and the euro by 3%.
Added
These Note Hedge Transactions are expected to reduce the potential dilution upon any future conversion of the 2024 Notes to the extent that the market price per share of our common stock exceeds the conversion price of $58.725 per share.

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