Chart Industries Announces Credit Rating Upgrade from S&P Global Ratings

Rhea-AI Summary

Chart Industries, Inc. (GTLS) receives an upgrade in credit ratings from S&P Global Ratings, indicating improved financial performance and market position.

Positive

• Upgrade in issuer credit rating from 'B+' to 'BB-' with a stable outlook.
• Upgrade in issue-level ratings on senior secured term loan and secured notes from 'B+' to 'BB-'.
• Upgrade in rating on unsecured notes from 'B' to 'B+'.
• Driven by successful execution following Howden acquisition, achieving cost and commercial synergies, increasing EBITDA, free cash flow, and debt reduction.
• Benefiting from secular market tailwinds for demand in clean energy and industrial gas markets.

Negative

• None.

Financial Analyst

The upgrade of Chart Industries' credit rating by S&P Global Ratings reflects a positive assessment of the company's financial health and operational performance. Credit ratings are critical for businesses as they affect the cost of borrowing and the perceived risk associated with the company's debt. The improvement from 'B+' to 'BB-' indicates a lower risk of credit default, suggesting that Chart has made significant strides in managing its debt and cash flow effectively.

Investors should note that the upgrade follows the successful integration of the Howden acquisition, which appears to have brought about cost efficiencies and commercial synergies. The early realization of these benefits, coupled with an increase in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and free cash flow, paints a picture of a company that is not only growing but doing so in a financially sustainable manner. The reduction in debt further strengthens the company's balance sheet, potentially leading to a more favorable borrowing environment and increased financial flexibility for future investments.

Moreover, the 'stable outlook' suggests a low likelihood of rating changes in the near term, providing a degree of certainty for investors. The secular market tailwinds for demand mentioned may refer to the growing need for clean energy solutions, which positions Chart Industries favorably within the industry. This strategic positioning could lead to sustained growth and profitability, reinforcing the company's creditworthiness over time.

Market Research Analyst

The credit rating upgrade for Chart Industries is indicative of a broader trend within the clean energy and industrial gas markets. The recognition of secular market tailwinds for demand in these sectors points to a robust growth trajectory that could benefit companies like Chart. As a solutions provider, Chart's ability to capitalize on these trends is crucial for maintaining competitive advantage and driving shareholder value.

From a market perspective, the company's early achievement of cost and commercial synergies post-acquisition suggests effective integration and management capabilities. Such operational efficiencies are often rewarded by the market as they imply a leaner cost structure and enhanced profitability. Additionally, the increase in EBITDA and free cash flow signals to investors that Chart is generating more operational income and has greater liquidity, which can be used for reinvestment or returning value to shareholders.

It is also essential to consider the potential impact on the company's stock performance. Typically, credit rating upgrades can lead to an optimistic investor sentiment, potentially increasing the stock price. However, it is important for investors to conduct their own due diligence and consider the company's performance in the context of the overall market conditions and sector-specific challenges.

Economist

The credit rating upgrade for Chart Industries by S&P can be seen as a microcosm of the broader economic environment where clean energy and industrial gas sectors are gaining importance. From an economic standpoint, this upgrade suggests that the company is well-positioned to navigate the macroeconomic challenges and take advantage of the secular trends towards cleaner energy solutions.

Increased EBITDA and free cash flow are indicative of robust operational efficiency and financial discipline, which are particularly important in a period where economic cycles can affect capital availability and cost. The reduction in debt is a prudent move in an environment where interest rates can fluctuate, impacting the cost of debt servicing for corporations.

Furthermore, the stable outlook provided by S&P suggests confidence in the company's future performance despite potential economic headwinds. This could reflect a belief in the resilience of the clean energy and industrial gas markets, even in the face of economic uncertainty. For stakeholders, this offers a measure of reassurance about the company's prospects and its ability to maintain a solid financial foundation amidst changing economic conditions.

ATLANTA, March 11, 2024 (GLOBE NEWSWIRE) -- Chart Industries, Inc. (NYSE: GTLS) (“Chart”), a leading global solutions provider to clean energy and industrial gas markets, announces that S&P Global Ratings (“S&P”) has upgraded Chart’s issuer credit rating to ‘BB-’ from ‘B+’ with a stable outlook. S&P also raised the issue-level rating on Chart’s senior secured term loan and secured notes to ‘BB-’ from ‘B+’ and the rating on the unsecured noted to ‘B+’ from ‘B’. These ratings upgrades were driven by Chart’s execution against targets for the first year following the Howden acquisition, early achievement of associated cost and commercial synergies, increasing EBITDA, free cash flow, and debt reduction as well as secular market tailwinds for demand.

About Chart Industries, Inc.

Chart Industries, Inc. 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. The company’s unique product and solution portfolio across stationary and rotating equipment is used in every phase of the liquid gas supply chain, including engineering, service and repair and from installation to preventive maintenance and digital monitoring. Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas and CO2 capture amongst other applications. Chart is committed to excellence in environmental, social and corporate governance 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, the company maintains accountability and transparency to its team members, suppliers, customers and communities. To learn more, visit www.chartindustries.com.

Investor Contact:
John Walsh
VP, Investor Relations
770-721-8899
john.walsh@chartindustries.com

What is the recent credit rating upgrade for Chart Industries, Inc. (GTLS)?

Chart Industries, Inc. (GTLS) received an upgrade in its issuer credit rating from 'B+' to 'BB-' with a stable outlook.

What factors led to the ratings upgrades by S&P Global Ratings?

The upgrades were driven by successful execution post-Howden acquisition, achieving cost synergies, increasing EBITDA, free cash flow, and debt reduction, along with favorable market demand trends.

How has Chart Industries' financial performance improved according to the press release?

Chart Industries' financial performance has improved through increased EBITDA, free cash flow, and debt reduction following the Howden acquisition.

What market sectors does Chart Industries operate in?

Chart Industries operates in clean energy and industrial gas markets, benefiting from secular market tailwinds for demand.

What is the significance of the credit rating upgrade for Chart Industries?

The credit rating upgrade signifies improved financial performance and market position for Chart Industries, reflecting successful execution and market demand trends.