White Paper: Chart Industries and Future Stock Price Outlook

By: Kerry Grinkmeyer CFP, ChFC, CLU

Introduction

Chart Industries (GTLS) is poised to capitalize on two major pillars of the clean energy revolution: Liquid Natural Gas (LNG) and Hydrogen. As global industries pivot toward sustainable energy, Chart’s innovative solutions in these sectors provide significant growth opportunities. This white paper delves deeper into the future of big LNG and hydrogen, how these sectors are expected to grow, and how Chart Industries is uniquely positioned to benefit from these changes.

1. The Future Growth of Big LNG

Global LNG Demand

Liquid Natural Gas (LNG) is increasingly seen as a cleaner, transitional energy source as the world shifts from fossil fuels to renewables. According to industry projections, the global LNG market is expected to grow at a CAGR of 6% from 2023 to 2030, driven by rising demand for cleaner energy sources, especially in Asia-Pacific, Europe, and North America. Countries like China and India are key players in this demand, as they move away from coal to meet climate goals while ensuring energy reliability.

This increasing demand for LNG is supported by the transition to lower-carbon energy sources, as LNG emits fewer pollutants compared to coal and oil. LNG is also favored for its ability to provide baseload power, which is crucial for stabilizing energy grids that are integrating more intermittent renewable energy sources like wind and solar.

Chart Industries’ Role in LNG Growth

Chart Industries plays a pivotal role in the LNG value chain, providing solutions for liquefaction, transportation, storage, and regasification. Their cutting-edge IPSMR technology (Integrated Precooled Single Mixed Refrigerant) is particularly well-suited for LNG applications and is a key factor in their ability to compete for large-scale LNG projects.

Chart’s modular LNG solutions give the company an edge as more countries and industries adopt LNG to meet energy demand. Modular solutions allow for quicker deployment, reduced footprint, and lower costs, making LNG more accessible and cost-efficient. Chart’s ability to adapt these solutions across multiple industries, including power generation and industrial cooling, further strengthens its position as a leader in the LNG space.

Big LNG Projects and Growth Potential

Chart’s involvement in big LNG projects continues to grow. With a current pipeline of 32 major LNG projects, including 16 international projects considering the use of their IPSMR technology, Chart has secured a strong footing in the global LNG market. The company has already been awarded a key role in high-profile projects like Cheniere’s Sabine Pass and Corpus Christi terminals.

Chart’s liquefaction and storage technologies, coupled with its global manufacturing presence, enable it to serve a wide variety of LNG applications, from traditional energy projects to specialty industrial uses. These projects, once fully booked, are expected to contribute $1.5 billion in backlog orders, underscoring the significant upside potential for Chart in the coming years.

2. The Hydrogen Revolution and Its Impact

Hydrogen as a Clean Energy Source

Hydrogen is widely regarded as a critical component of the global push toward a net-zero economy. As governments and industries seek to reduce carbon emissions, hydrogen offers a versatile and clean energy source. It can be used in a wide range of applications, including transportation, power generation, and industrial processes.

Green hydrogen, produced using renewable energy sources like wind and solar, is expected to play a major role in decarbonizing industries that are difficult to electrify, such as steel production, shipping, and heavy transport. The global hydrogen market is projected to grow at a CAGR of 20-25% through 2030, fueled by government subsidies, infrastructure investments, and corporate sustainability goals.

Chart’s Position in the Hydrogen Value Chain

Chart Industries is already a key player in the hydrogen economy. The company provides equipment for liquefaction, storage, and distribution of hydrogen, capitalizing on its existing technologies that can be adapted for multiple gases. This flexibility allows Chart to use its hydrogen solutions across industries, including power generation, steel production, and heavy-duty transport.

Chart’s hydrogen technology has been used for applications such as class 8 heavy-duty trucks and onboard vehicle tanks for hydrogen storage. These offerings position Chart as a critical supplier to industries seeking to transition to hydrogen-based energy systems.

Hydrogen Hubs and Long-Term Opportunities

The U.S. Department of Energy’s Hydrogen Hubs initiative, part of a broader federal clean energy strategy, presents a major growth opportunity for Chart. These hubs are designed to scale up hydrogen production, distribution, and use, making them a vital part of the hydrogen infrastructure. Chart’s strong portfolio of hydrogen technologies ensures it will be a significant player in these government-backed projects.

Moreover, as governments and industries around the world push for green hydrogen solutions, Chart’s cryogenic storage and hydrogen liquefaction capabilities will be in high demand. This includes potential partnerships with global corporations like Airbus, where Chart was recently awarded a contract to fabricate a liquid hydrogen inner vessel subsystem for Airbus’s ZEROe program.

3. Chart’s Adaptability and Synergy Between LNG and Hydrogen

One of Chart’s greatest strengths is its ability to adapt existing technologies across multiple industries and applications. The same equipment used for LNG liquefaction can also be adapted for hydrogen liquefaction, and its cryogenic storage tanks can be used to store both gases. This versatility minimizes the need for new product development while allowing the company to rapidly respond to changing market dynamics.

Chart’s strategic acquisition of Howden has further enhanced its ability to offer comprehensive solutions for industrial cooling, compression, and air handling systems, which are critical in both LNG and hydrogen applications. By integrating Howden’s capabilities into its existing portfolio, Chart has not only increased its market reach but also improved its ability to offer end-to-end energy solutions for industries like data centers, mining, and space exploration.

The synergy between LNG and hydrogen within Chart’s product offerings ensures that the company will remain a critical player as both energy sources continue to grow. With the transition to cleaner energy accelerating, Chart’s dual focus on LNG and hydrogen allows it to capitalize on both short-term demand for LNG and the long-term potential of hydrogen.

4. Financial Implications and Stock Price Outlook

Given the growth projections for both big LNG and hydrogen, Chart Industries’ future revenue and earnings are expected to increase significantly. Chart’s current guidance for 2024 projects:

• Revenue: $4.45 billion to $4.6 billion
• Adjusted EBITDA: $1.08 billion to $1.15 billion
• Free Cash Flow: $400 million to $475 million

As the company continues to secure large-scale LNG and hydrogen projects, these figures are expected to grow. By 2026, Chart’s revenue is forecasted to reach $5.4 billion, with adjusted EPS growing at a 40%-47% CAGR. At a 5 Year Average PE Ratio of 25 as opposed to its current depressed PE Ratio of 11.76 we calculate a 2025 share price of $384.75 rather than $180.99.

Further analysis based on Enterprise Value to Revenue Growth provides support for the higher projections in share price. This robust growth, combined with the company’s efforts to reduce debt and improve cash flow, supports a conservative stock price target of $324 to $380 by 2025.

Conclusion

Chart Industries is positioned to play a pivotal role in the global energy transition, with strong growth potential in both LNG and hydrogen markets. As these industries expand, Chart’s adaptable technologies and strategic positioning will drive continued revenue and earnings growth. Investors can expect significant appreciation in Chart’s stock price as the company continues to capitalize on the increasing demand for clean energy solutions in the AI-driven and industrial sectors.

This white paper concludes that Chart Industries is not only well-positioned to benefit from the current LNG boom but is also at the forefront of the hydrogen revolution, making it a compelling investment opportunity for long-term growth.

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