Q4 2024 Chart Industries Inc Earnings Call
Good morning, and welcome to the chart Industries, Inc, 2020 for fourth quarter and full year results conference call all.
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Two if I could the information regarding forward looking statements and the risk factors included in the company's earnings release and latest filings with the SEC The company undertakes no obligation to update publicly or revise any forward looking statements during.
During this conference call references maybe made to non-GAAP financial measures just.
Speaker Change: To assist you in understanding this none Deb James check I suppose said reconciliations to the most directly comparable GAAP financial measures on this chart Industries' website, we have provided a supplemental slide presentation to support our comments on this call that can be accessed in the presentations and Webcasts section of the website at Www Dot chart.
Speaker Change: Industries Dot Com I would now like to turn the conference call over to MS. Sheila Vanco chart Industries' CEO. Thank you. Please go ahead.
Sheila Vanco: Thank you you know good morning, everyone and thank you for joining our fourth quarter and full year 2024 earnings call. Joining me today is our CFO, Joe Brinkman will begin on slide four of the supplemental deck that was released this morning results shown are from continuing operations when referring to any comparative period, all metrics are pro forma for continuing.
Sheila Vanco: includes the following businesses that were divested in 2023, Roots, American Fan, Cofimco, and Creo Diffusion.
Sheila Vanco: In the fourth quarter 2024, we generated $281.5 million of net cash from operating activities.
Sheila Vanco: and after $20.5 million of CapEx spend, had free cash flow of $261 million, contributing to full year 2024 free cash flow of $388 million.
Sheila Vanco: This cash was used to reduce net debt and resulted in our year-end 2024 net leverage ratio of 2.8, making further progress to our net leverage ratio target of 2 to 2.5, which we expect to hit in 2025.
When compared to the fourth quarter 2023 pro forma
Sheila Vanco: Quarters were $1.55 billion, an increase of 29.4%, including Phase I of Woodside, Louisiana LNG, which was received in December 2024.
Sheila Vanco: Fourth quarter 2024 sales of $1.11 billion increased 10.8% excluding FX, contributing to full year organic sales growth of 16.9%.
Sheila Vanco: Fourth quarter 2024 had a $17 million headwind from foreign exchange in terms of sales when compared to our forecast heading into the quarter.
Sheila Vanco: Fourth quarter reported operating income of $188.3 million was $243.4 million when adjusted for unusual items primarily related to integration and restructuring.
Sheila Vanco: This reflects lower costs and leveraging SG&A, resulting in 22% adjusted operating margin and 33.6% gross margin.
Sheila Vanco: For the full year 2024, Adjusted Operating Margin was 21.1%, an increase of 400 basis points.
Sheila Vanco: Adjusted EBITDA for the fourth quarter of $283.6 million, or 25.6% of sales, contributed to our full-year adjusted EBITDA of $1.014 billion, an EBITDA margin of 24.4%, a year-over-year increase of 330 basis points.
Sheila Vanco: faced headwinds from foreign exchange, the delta in the tax rate compared to our forecast, the change in share count due to market price movement, and interest expense, which combined were approximately a 33 cent headwind to Q4 EPS.
Sheila Vanco: Slide 5 is a summary of the fourth quarter compared to Q4-23 Pro Forma, and we'll cover these in the coming few slides. So moving on to slide 6.
Sheila Vanco: You can see some specific order examples from the fourth quarter 24 on slide 6. Starting in the upper row, left-hand side, as I mentioned earlier, we received the Phase 1 order for Woodside, Louisiana LNG, and we expect to receive Phase 2 in 2025.
Sheila Vanco: Moving left to right in the top row, we have seen an increasing need for Nitrogen Rejection Units, or NRUs, as gas composition in the U.S. Gulf Coast becomes more varied.
Sheila Vanco: We are pleased to have received an NRU award from Energy Transfer and look forward to working closely to help them and other midstream and downstream providers solve these challenges to natural gas.
Sheila Vanco: While this is a global opportunity for CHART, in the United States we are specifically seeing more nitrogen and other inerts and gas coming out of the ground as wells age and are drilled deeper.
Sheila Vanco: Many pipelines have a 3% limit on nitrogen, and for LNG, the nitrogen limit drops only 1%. Importantly, this is not driven by policy, but rather customer efficiency.
Sheila Vanco: We recently announced ChART's Carbon Capture Solution and Helium Storage for Pulsar Helium, utilizing our Earthly Labs technology, which has been scaling larger in recent quarters.
Sheila Vanco: On the bottom row of slide six, you can see a few other fourth quarter wins, including air coolers for a data center, as well as an order from our recently announced partnership with Bloom Energy.
Sheila Vanco: We also received a $26 million order from an African power utility which includes field installation at site.
Sheila Vanco: Finally, we had orders totaling $28.4 million for the space exploration and market in the fourth quarter of 2024, the highest space exploration order quarter of the year.
Sheila Vanco: Additionally, we've now received orders for the space exploration and market to date in the first quarter of 2025, totaling approximately $60 million.
Sheila Vanco: A few other notes to the start of 2025 so far in Q1 in terms of some of the larger orders received today.
Sheila Vanco: We received a $35 million mining award, additional EGR blowers, a multi-million dollar order for tanks for an Asia-Pacific chip manufacturing site, and multiple brazed aluminum heat exchanger orders for various energy applications.
Sheila Vanco: Additionally, aftermarket has started the year strong and just yesterday we executed an LTA with an industrial gas major.
Sheila Vanco: Additionally, we had our best order year for hydrogen in Europe in 2024, and record hydrogen sales in the fourth quarter in the full year 2024.
Sheila Vanco: We currently have approximately $24 billion in our commercial pipeline of opportunities that are not yet in backlog, and we also have customers who have committed work to us that is not yet in backlog, totaling approximately $2 billion of commitments.
Sheila Vanco: Our LNG end market ended 2024 with strength, and as we look ahead, we are seeing an expanded commercial pipeline of global opportunities. India, the Philippines, and Japan have recently shared their intent to import U.S. LNG, supported by the current U.S. administration's support of growing American energy production.
Sheila Vanco: As you can see on the left-hand side of slide 7, and as previously discussed, we booked the Woodside, Louisiana LNG Phase 1 order in the fourth quarter. As a reminder, the full potential for the Woodside, Louisiana LNG site is three additional phases of 5.5 million tons per annum each.
Sheila Vanco: We are pleased to support Chenier and Bechtel Energy on the Corpus Christi Stage 3 liquefaction project with our IPSMR process technology. Chenier's first cargo out of CCL Stage 3 was last week, meaningfully ahead of schedule.
Sheila Vanco: As we extend our process technology install base, we are also supporting our customers with more service arrangements, and we look forward to supporting Chenier over the coming years with our recently executed Master Services Agreement.
Sheila Vanco: Our recently executed Master Goods and Services Agreement with ExxonMobil includes partnering on the supply of LNG equipment as well as the utilization of our IPSMR process technology.
Sheila Vanco: For the full year 2024 orders sales gross profit dollars and margin operating profit dollars and margin EBIT dollars and margin and free cash flow were records fourth quarter 2024 sales of $1 $1 billion increased 10, 1%.
Sheila Vanco: Each quarter in 2024 sales sequentially increased and full year 2024 sales of $4.16 billion, whereas a year over year organic increase of 17, 5% with a negative <unk>, 6% foreign exchange headwind.
Sheila Vanco: <unk> operating income in the fourth quarter was $188 $3 million and one adjusted was $243 4 million or 22% of sales supporting the full year 2024, adjusted operating margin of 21, 1%.
Sheila Vanco: Increase year over year or 400 basis points.
Sheila Vanco: The second half of 2024, adjusted operating margin was 22, 1% compared to the first half of 19.9%, reflecting synergies flowing through the P&L as well as leveraging SG&A.
Sheila Vanco: Adjusted EBITDA for Q4 of.
Sheila Vanco: $283 $6 million contributor to our full year 2024, $1.014 billion or 24, 4% of sales when adjusted an increase of 330 basis points. We also continue to have confidence in our mid <unk> gross margin percent medium term target.
Sheila Vanco: Fourth quarter 2024 of free cash flow was $261 million contributing to our end of the year 2024 net leverage ratio of 2.8 as shown on slide 10, we reiterate our financial policy and until we are in our target net leverage ratio range of two to two and a half we do not do any share.
Sheila Vanco: Purchases or material cash acquisitions.
Sheila Vanco: As reflected in the second half of 2024, our Capex spend is no normalizing and we expect capex to be approximately $110 million.
Sheila Vanco: Net working capital defined as accounts receivable inventory accounts payable unbilled contract revenue customer advances and billings in excess as a percent of trailing 12 month sales improved to 13, 4%.
Sheila Vanco: We continue to look to optimize our capital structure and took a step toward this in the fourth quarter 2024 before fully settling our convertible notes that came due in November 2024.
Sheila Vanco: Additionally, our minority investment in H Tech, we have a put call option that could have been exercised following the September 2024, three year Mark.
Sheila Vanco: We have a signed LOI to modify the option so that it will be structured similar to the 2021 option and it will not be exercisable until 2028. Therefore, we do not expect any balance sheet impact or cash impact from the option until at least at that time.
Sheila Vanco: Moving to slide 11.
Sheila Vanco: Provide some color around the segments and set up to our reiterated 2025 outlook starting.
Sheila Vanco: Starting with cryo tanks solutions or Cts fourth quarter, 'twenty, four Cts orders of 138, and a half million dollars.
Sheila Vanco: Decreased 11, 9% when compared to the fourth quarter of 2023, primarily driven by softer European industrial gas demand in the fourth quarter of 2023, having three customers that order to larger projects in the Americas.
Sheila Vanco: Demand start 2025, and the commercial pipeline for 2025, and Cts is picking up and expect it to drive year over year increases in both orders and sales.
Sheila Vanco: Quarter Cts sales of $150 million decreased 26, 4% when compared to the fourth quarter of 'twenty, three which had approximately $17 million of specific project sale that did not repeat in the fourth quarter of 'twenty four.
Sheila Vanco: Reported gross profit margin of 24, 4% for Cts increased 210 basis points compared to the prior year.
Sheila Vanco: Continued efforts in efficiency and operational improvements drove an improvement in gross margin.
Sheila Vanco: In 2024 for the full year EPS of 140 basis points.
Sheila Vanco: And heat transfer systems are H T S. The fourth quarter order sales gross profit gross margin operating income operating income margin and EBITDA and EBITDA margin were records for the segment for that quarter than any quarter in our history with that said, we continue to expect to HTS orders and sales to grow 2002.
Sheila Vanco: Five over 2024, driven by a traditional energy as well as LNG.
Sheila Vanco: Fourth quarter 2020 for HTS orders of $536 million increased over 66% when compared to the fourth quarter of 2023, driven by the large LNG phase one order that we got as well as growth in the order book for all other HTS.
Sheila Vanco: Excluding the Woodside order HTS orders still grew in the fourth quarter of 24.
Sheila Vanco: ACS sales for the quarter were $288 $8 million, which grew 14, 2% compared to Q4 23 and had associated gross profit margin of 31, 8% the highest quarter of the year for HTS.
Sheila Vanco: Moving to specialty products fourth quarter 'twenty for specialty products orders of $509 million increased 27, 7% when compared to the fourth quarter of 23, driven by orders in carbon capture energy recovery infrastructure and space exploration, each more than doubling compared to the fourth quarter.
Sheila Vanco: 2023.
Sheila Vanco: Fourth quarter 'twenty, four specialty product sales of $317 million increased 47, 7% when compared to Q4, 'twenty three driven by a combination of meaningful increases, meaning 30% or more in sales and carbon capture hydrogen LNG vehicle tanks infrastructure water treatment.
Sheila Vanco: This exploration energy recovery and marine.
Sheila Vanco: Reported gross profit margin of 27, 4% decreased 120 basis points, when compared to the fourth quarter of 2003 and specialty.
Sheila Vanco: Although gross margin increased 110 basis points sequentially compared to the third quarter of 24.
Sheila Vanco: For Q4, 24 gross margin reflected specific third party expenses and inefficiencies in our startup was incurred which we incurred at the Theodore Alabama, where its heading to facility.
Sheila Vanco: Looking at the full year specialty products gross margin of 27%. If we did not have the inefficiencies related to the <unk> costs that I just referred to.
Sheila Vanco: Specialty gross margin would've been approximately 29%.
Sheila Vanco: Repair servicing leasing.
Sheila Vanco: For the fourth quarter orders were $369 million, which increased 14, 2% compared to the Q4 2023, driven by general strong aftermarket trends as well as a $25 million retrofit order for a utility.
Sheila Vanco: This past year, we saw consistent retrofit service and repair awards and we have good visibility to more ahead for 2025.
Sheila Vanco: Q4, RSL sales of $351 million increased 4% and associated gross profit margin of 44, 8% was in line with our typical gross profit margin in the RSL segment.
Sheila Vanco: Q4, RSL contributed to growth in the full year 2024, RSL order book of 10, 5% year over year and sales growth for the year of 19, 2%.
Sheila Vanco: Ourselves now approximately one third of our business and increase from a few years ago in the low teens, we expect it to continue to grow and the approximately high single digit to 10% range driven by multiple actions that are underway to give a few examples of those actions are those are around covering our install base globe.
Sheila Vanco: <unk> in geographies that we have a less current coverage penetrating our digital uptime offering and coverage, including deploying digital uptime on products, such as earthly labs or cause an LNG fleets and continuing to drive L. P. S. A's and framework agreement increases as a as we've discussed earlier.
Sheila Vanco: So finally moving to slide 12, we reiterate our prior 2025 outlook.
Sheila Vanco: One here.
Sheila Vanco: Want to point out a few 2025 considerations about the outlook.
Sheila Vanco: Our strong December 31, 2024, our backlog, including the Woodside LNG phase one order that we referred to.
Sheila Vanco: As well as a few specific larger orders received quarter to date in Q1, such as the mining order I referred to in the strong start to the year in the space exploration end market supports our backlog conversion for.
Sheila Vanco: Our full year 2025 guidance range offsetting the potential negative foreign exchange impact that if it holds as it is currently for the full year would have an approximately 2% negative impact on sales.
Sheila Vanco: Mr conversion in commercial pipeline conversion to backlog would be key contributors to achieving the higher end of our outlook.
Sheila Vanco: We anticipate the second half of 2025 to sequentially increase when compared to the first half of 2025.
Sheila Vanco: Our first quarter is anticipated to be our lowest quarter of the year as is typical.
Sheila Vanco: Additionally, the first quarter of our year is typically a use of cash given the timing of insurance taxes bonuses and our senior note interest and other seasonal cash uses.
Sheila Vanco: As a reminder, we have our semiannual unsecured interest payment of approximately $79 million in the first and third quarter of 25.
Sheila Vanco: Regarding tariffs this is not explicitly in our guidance as there is little clarity yet on the breath and specificity of the action as well as the length of their respective durations.
Sheila Vanco: Offer a point of information based on our work on this topic done to date internally potential gross impacts from tariffs as we understand them today would fall within our EBITDA range.
Sheila Vanco: We also want to point out a few things that we have done and continue to do to mitigate impacts from tariffs.
Sheila Vanco: We believe that we are much better positioned today not only for tariffs, but also potential supply chain disruptions. Following the last round of tariffs as well as the supply chain challenges of 2021 and our associated actions taken subsequently around multiple sources of supply and regional as well as global supply structures.
Sheila Vanco: As we've referred to before we have flexible manufacturing and flexible supply chain in our business.
Sheila Vanco: We've worked very hard on instilling our chart business excellence or CBE process and were seeing traction from this effort.
Sheila Vanco: And as a reminder, we are the only manufacturer of raise aluminum heat exchangers in the United States, including the worlds two largest furnaces in our facilities we.
Sheila Vanco: We have a strong air cooler and sand manufacturing footprint also in the United States as well as the world's largest shop build cryogenic fabrication in our Theodore Alabama facility, the strong United States manufacturing footprint can also help our customers as they navigate their supply needs.
Sheila Vanco: Before we open it up for Q&A, we wanted to take a moment to share our enormous thanks to our global one chart team members for their focused execution and dedication to accomplish this past year's results and for the the start to 2025. Thank you all for all of your efforts and now.
Please open it up for Q&A.
Sheila Vanco: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please first followed by the one on your telephone keypad.
He was here a pump that you had has been raised and should you wish to cancel your request. Please press star followed me to choose if you're using a speaker phone. Please lift the handset before pressing any keys one woman piece for your first question.
Sarah: Your first question comes from the line of Sarah <unk> from Bank of America. Please go ahead.
Sarah: Hi, Good morning, Joe.
Speaker Change: Good morning.
Joe Brinkman: If you don't mind, if I start at a little bit higher level in 'twenty to 'twenty five a guide I know the revenue guide is unchanged. Despite the FX headwinds, which is good to see can you maybe just a just remind us of how you are thinking about the four segments. I know you talked about that at your capital markets day, and that did you say that Odyssey.
Joe Brinkman: You would still grew high single digit to 10%, but maybe if you can step through some of the other segments. If one is looking better or something else is slightly offsetting just just to walk us through that.
Joe Brinkman: Absolutely. Thank Sarah So you commented on ourselves and we see many many actions that are well underway to to achieve that and consistently achieve that ahead is our expectation in the RSL segment in.
Joe Brinkman: In HTS, we expect growth in 2025 or 2020 for an LNG is a driver of that so we would expect LNG sales to be higher than 25 compared to 2024, and we also see a just traditional energy applications and being very active right now in particular.
Joe Brinkman: When we talk to our customers. The last couple of months, it's really around we're going to take this opportunity under the current administration to to build out the energy framework, but also just as growing demand for <unk>.
Joe Brinkman: For all things energy energy intensity around applications that we hear about every day, whether that's data centers or whether that's providing LNG globally. So that that HTS segment, we expect it to grow with a tailwind from LNG.
Joe Brinkman: In Cts, we said traditionally for C. T S. And this is kind of a low to mid single digit grower. We would expect to see approximately mid single digits are too in the Cts segment and we've.
Joe Brinkman: We've seen.
Joe Brinkman: Good start to Q1 in terms of Cts orders.
Joe Brinkman: And then finally in specialty our backlog conversion on specialty.
Joe Brinkman: It is a key driver to our expected growth in that particular segment, we started to see.
Some.
Joe Brinkman: Improving backlog can conversion in 2024 in the specialty segment and we expect that to continue to pick up the pace, especially with some of these carbon capture projects that we've referred to and some of the orders that came into the order book in the second half of 2024.
Joe Brinkman: We anticipate growth across each of the four segments in 25, when compared to 24.
Joe Brinkman: Okay Fantastic and then I know you just talked about our HD yesterday LNG contributing to growth over there. If you can dive a little deeper what did you learn that the LNG side of things, especially big LNG. If you think about what's in your backlog how that converts to revenue in 2025, how should that go to a part of the reason I ask is it.
Joe Brinkman: It's a full solution offering if it's ips it marred by the way good to see good really good traction projects starting up right. So how does that trend towards the out of backlog Mexico 25 was the 24th and then what does that mean for HTS margins.
Joe Brinkman: Okay.
Joe Brinkman: First of all I really thank you for pointing out the Ics our attraction, we're thrilled with with the.
Joe Brinkman: What's happened to date in terms of the first our first liquid and the first cargo for Cheniere Corpus Christi stage III project, a new fortress energy sharing that fast LNG is producing a meaningfully above nameplate capacity, so gaining gaining that traction globally for ips him or her.
Joe Brinkman: It has been a positive including.
Joe Brinkman: Any any floating project so to address your question directly.
Joe Brinkman: When you see a big LNG project announced coming into the order book, what we would anticipate typically in those projects is revenue meaningfully start approximately six to eight months. After the order comes in there's a little bit of revenue around engineering, and maybe some order material ordering before that but in terms of <unk>.
Joe Brinkman: The cadence of when it really starts to be consistent across coming quarters, its that six to eight months Mark.
Joe Brinkman: In terms of what we would expect and twenty-five yeah. The timing of of wood tied obviously, we referred to it being a Q4 'twenty four order. So you can kind of apply that type of logic to it also having having strong just global LNG backlog not only around big LNG.
Joe Brinkman: We would expect we'd expect that to to flow through the year with.
Joe Brinkman: First half to second half step up just simply because of the the Woodside timing and.
Joe Brinkman: LNG projects are nice contributors to our HTS segment margin in particular, when they utilize Ips M. R. And so that is another factor in how we anticipate to to achieve our 2025 growth in margin for the total company.
Joe Brinkman: With H T S being a key contributor to that.
Speaker Change: Domestic okay. Thanks for that color I'll turn it back.
Joe Brinkman: Our.
Speaker Change: Thank you and your next question comes from the line of Ben Nolan from Stifel. Please go ahead.
Ben Nolan: Thanks, I appreciate it so Joe I wanted to start on Cts.
Speaker Change: Ccs if we could.
Ben Nolan: It was a little lower.
Ben Nolan: But it sounds like <unk> is growing pretty well I know that I know that China is a big part of that particular business.
Ben Nolan: Are you seeing well I guess the improvement that you're seeing is it in China or is it elsewhere and can you maybe talk through how you're thinking about.
Ben Nolan: The China exposure and sort of how that fits.
Ben Nolan: Just broadly.
Ben Nolan: What you have going on.
Ben Nolan: Absolutely good morning, Ben Thanks for the questions. So so let me just hit C. T. S. First and then I'll can take China broadly second.
Ben Nolan: In terms of Cts, yeah, so far I'm pleased to the start of 'twenty, five, especially coming off declining declining orders and sales on a year over year in the fourth quarter in the segment, which interestingly enough.
Ben Nolan: The second half of 'twenty four we did see industrial gas slowdown in China, which would impact Cts, but also we saw kind of the summer slowdown in Cts in Europe as well and.
Ben Nolan: No real chunky orders in in Q4 of 24 in that segment.
Ben Nolan: The team is the team is feeling good about our order and sales growth N C. T. S for 2025, and so we'll continue to monitor that closely not only specific to China, but kind of globally are really pleased to have executed that LTA yesterday with one of the the IAG majors.
Ben Nolan: So those types of things also help us have visibility too to the forecast.
Ben Nolan: When you were speaking to China.
Speaker Change: Yeah, China first quarter in China, Obviously, you have Chinese new year in there, but we're seeing consistency in China right now and I think the other part of the question or at least that I want to address is around <unk>.
Speaker Change: Supply chain in China in particular, where we're not dependent on China supply chain. We have other sources of supply we're very regionalized in in our supply chain.
Speaker Change: It really as a result of the actions that.
Speaker Change: Our global sourcing team has taken since our since 2021, and we'll continue to dynamically assess and make those sourcing decisions based on the market conditions, but we feel we feel is positioned well to to be agile in response to what's happening in China.
Speaker Change: Great and then.
Speaker Change: Just another quick one.
Speaker Change: I appreciate the color that you gave on NR use we're hearing a lot about it too.
Speaker Change: And.
Speaker Change: Can you maybe just frame in how big of a business. It is now just so that we can I cannot understand a little bit about what it could be for you.
Speaker Change: Yes.
Speaker Change: Maybe to give a sense of kind of what the size of and in our U.
Speaker Change: It could be.
Speaker Change: There is I guess in terms of chart content, depending on the size.
Speaker Change: And are you going to be anywhere between approximately $20 million of chart content too.
Speaker Change: It'd be upward of 75 million per and are you. It just depends on the scope of the application et cetera.
Speaker Change: Definitely an area that we have seen a meaningful increase in terms of customer inbounds around this it's a capex decision spend but it's also an optimization and efficiency spend for these plants.
Speaker Change: Currently it's not a very large portion of our business you'd have.
Speaker Change: You would have had one or two in our use in any given type of year, but we would expect that to step up meaningfully and what we've had to date has been toward the lower end of what I described and are used to be.
Speaker Change: Okay.
Joe Brinkman: Very helpful. I appreciate it thanks Joe.
Speaker Change: Great. Thanks, Ben appreciate it.
Speaker Change: Thank you and your next question comes from the line of Scott Gruber from Citigroup. Please go ahead.
Scott Gruber: Yes, good morning.
Speaker Change: One of them.
Scott Gruber: Jill.
Scott Gruber: I wanted to start on aftermarket I'm going to go to.
Scott Gruber: Good growth year, 'twenty, four but you know the last several quarters or kind of flattish.
Speaker Change: You mentioned the strong start to the inbound in <unk>, but can you speak specifically to the growth outlook for aftermarket in 'twenty five and will it be in line with the kind of high single digit longer term targets, you have and what we need to see from an order perspective earlier in the year to make that happen.
Speaker Change: Yes, yes in either the sequential kind of Q2 to Q3 Q3 to Q4.
Speaker Change: <unk> RSL each of those had either a specific aftermarket service and repair or have a decent of a decent size and we have good visibility to the Lps as a framework agreement as well as a multiple service and repair that that customers are looking to do.
Speaker Change: In 2025, so we feel confident in our RSL growth outlook, both for the order and the sales book.
Speaker Change: It's important that we don't get behind in the year. I think is very is a key metric for us that we look at internally is that where we're seeing consistency in the aftermarket globally.
Speaker Change: And that is true so far to date Q1 quarter to date, we don't want to get behind where you were sitting here in September saying, we need to get a large service and repair order in order to hit the to hit that high single digit to 10%, but the visibility that we have to the pipeline is strong around ourself and then what we what we all.
Once.
Speaker Change: So you take advantage of.
Speaker Change: Things that are within our own control on the <unk> side and those are multiple different activities that our global aftermarket team and our regions working with them.
Speaker Change: We're working on that specific product line targeting in Europe, North Africa around pissed and compressor penetration for the aftermarket centrifugal compressors coverage globally is an area that is on our on our key activities list and then chart legacy coverage. We also are seeing more.
Speaker Change: <unk> to have service agreement with the operators of larger plants, and that's something that ties hand in hand to I P. S. M. R. In particular, where the EPC once the first gas or first liquid has achieved the EPC. Typically then is done with the project into having there.
Speaker Change: Relationship directly with the operator, where it's our process technology is a is a.
Speaker Change: Way for us to further penetrate service agreements.
Speaker Change: The digital uptime, we're seeing great traction on taking that across specific products and we're about to introduce that into into the heat exchanger offering as well. So those are just a few examples of kind of within our own control to make sure that we're not relying on market dynamics to achieve that.
Speaker Change: That growth that we have laid out for 25 and ourselves.
Speaker Change: No that's great color.
Speaker Change: I want to come back to the Ips of more technology, given that it's getting good traction I believe the payment structure in most of the contracts as far as an upfront licensing fee, but with greater adoption in global Msas like the one you have with Exxon with would you consider transitioning toward a more.
Speaker Change: Of an ongoing fee structure because of technology.
Speaker Change: Oh.
Speaker Change: What we what we currently have done it as you described there's a technology fee associated with the utilization of Ips EMR, but we are flexible working with our customers around what that what that could look like and how it is built into the contract our key our key on any of these larger projects.
Speaker Change: With or without <unk> is that we do not go upside down on working capital. So that those milestones are tied to.
Speaker Change: Our are tied to our spend on material and that we're not we're not behind the eight ball on that and that's been a key focus so I would say overarching. That's the first filter and then we work with the individual customers on kind of what that technology fee. How that's embedded well we'll go with their particular project, we're not adverse to it.
Speaker Change: Customer specific.
Speaker Change: Okay.
Sure. Thanks, Joe I'll turn it back.
Speaker Change: Thanks Scott.
Speaker Change: Thank you and your next question comes from the line of Manav Gupta from UBS. Please go ahead.
Manav Gupta: Good morning, I, just wanted to focus on the data center market.
Speaker Change: How are the discussions progressing with the datacenter providers and did.
Speaker Change: The deep seek announcements any change any of those discussions if you could just talk about that.
Speaker Change: Hi, good morning Martha.
Speaker Change: Data centers as a whole maybe maybe I'll just step back to the the.
Speaker Change: Increasing need for global energy.
Speaker Change: As is the theme and that that's inclusive of data centers.
Speaker Change: In our discussions.
Speaker Change: Amongst multiple different hyper scalar is consistent would be my would be my one word I would use if you had to ethylene use one word consistent in that.
Speaker Change: They're going to be spending money in this area and capex and they have a need for multiple different types of heat rejection are associated with with these data centers and that the energy power demand is going to continue to increase as.
Speaker Change: Artificial intelligence becomes smarter and there's more of it out there so I think the.
Speaker Change: Deep seek or otherwise there is not a change in direction of these folks looking for multiple different sources of power in multiple different ways to reject heat and that's really what we're hearing from them.
Speaker Change: We also.
Speaker Change: Because we're starting to see more demand in this market.
Speaker Change: We have recently hired a data center commercial team member.
Speaker Change: Who will be joining our business development team here in the next week or so who brings a breadth of datacenter background and market knowledge and connection so we would we.
Speaker Change: We do see this as a meaningful opportunity ahead for us.
Speaker Change: Perfect.
Speaker Change: In all cases here is your free cash flow guidance for next year, despite $50 million to $600 million and trying to understand what pushes us towards the top end of that guidance of $600 million and similarly for EBITDA trying to understand the blue Sky scenario, which pushes you towards the top end versus the midpoint of the guidance.
Speaker Change: Sure I can help with this one.
So the free cash flow forecast for this year is coming from stronger EBITDA conversion.
Speaker Change: To just conversion from the existing backlog.
Speaker Change: We do have we do have some normalizing of the Capex that I mentioned in my comments.
Speaker Change: Earlier, so just the combination of the two there.
Speaker Change: And our overall growth is driving the free cash flow to the forecast that we have.
Speaker Change: And then she thank you.
Speaker Change: Oh I'm sorry, the second part of my question there to the higher end of the of the EBITDA guidance, which would also be a contributor to the higher end of the free cash flow guidance, you want to speak to speak to that Joe.
Speaker Change: Yes, just just.
Speaker Change: Hum.
Speaker Change: Just as Joe described there as well as.
Speaker Change: Lower tax rate.
Speaker Change:
Speaker Change:
Speaker Change: Just.
Speaker Change: The backlog conversion backlog conversion and lower deal integration costs.
Manav Gupta: And in Manav, if there's a larger orders that come in early in the first half of or that you really in the first half of 'twenty five.
Manav Gupta: Those would have the opportunity also to contribute some revenue in the second half towards the higher end. So multiple different factors that go into achieving the higher end what I would also say that its just off of an absolute growth rate perspective on the higher end.
Manav Gupta: It would be year over year lower than what we achieved in 24 over 23 from the topline growth.
Thank you so much.
Manav Gupta: Okay.
Speaker Change: Thank you and your next question comes from the line of Marc Bianchi from TD Cowen. Please go ahead.
Marc Bianchi: Hi, Thanks.
Marc Bianchi: Could you say what the out of out of 2024 orders, how much was LNG and.
Marc Bianchi: And how are you thinking about that number for 2025.
Marc Bianchi: All approximate that mark.
Speaker Change: In terms of orders for LNG, Oh, and I'm gonna approximately only because when you look at kind of LNG with in within H T. S. Naturals like larger and then you have LNG infrastructure of her vehicle tanks, which even show up in specialty and then Theres. Some LNG regas that can show up in Cts as well I would.
Marc Bianchi: Estimated approximately.
Marc Bianchi: In the 20% to 25% range kind of orders and then we would anticipate that to be similar in 2025 compared to 2024.
Marc Bianchi: Okay.
Marc Bianchi: Okay.
Marc Bianchi: I think some folks anticipate an increase in 25, just given the change in the and the licensing for the U S.
Marc Bianchi: Is it is that conservatism on your part or was it just you know some stuff fell into the back half of 'twenty four and that maybe makes it less likely for growth maybe you could expand on that a little bit.
Marc Bianchi: Sure I would tell you that it's a kind of down the fairway way to answer the questions of an element of conservatism in that given it's hard to predict on the larger pieces and parts right. So to say consistent phase.
Marc Bianchi: Phase one of Woodside coming in in the back half of 'twenty. Four we mentioned, we anticipate phase two coming in 'twenty. Five. There's also you know a handful as you mentioned of other LNG projects globally not only in the U S that could move ahead, so there's opportunity for that to be larger than 25 compared to 24.
Marc Bianchi: That is not required for us to hit our 25 guidance that we put out there. So that's kind of how we're thinking of coming into the year. The construct around it really because there's variability of when these orders can can or may come in but.
Marc Bianchi: With that said our pipeline of LNG opportunities has grown in the last three months. So since we talked about the pipeline of LNG project opportunities not only for equipment, but also for Ics EMR potential has expanded and that's definitely a direct result of growing global demand.
Marc Bianchi: And for LNG the U S administration's bullishness on the Alaska on Pennsylvania on U S Gulf Coast as well as projects that were hearing or more.
Marc Bianchi: Much closer to moving ahead than they maybe were even six months ago. He's got folks talking out there about projects like like a body LNG with impacts like Tanzania LNG.
He's got delfin.
Marc Bianchi: Definitely more likely than it was even a year ago. So just to name a few I think I think the opportunity set has increased in the last few months and we're really well positioned to play on many of them. It's just that it's hard to tie in some of the larger <unk>.
Yep Yep makes sense.
The other one I had was on this teddy too.
Marc Bianchi: On a cost thing that was happening just first of all to clarify I think you said it was like what margins would've been 29% without that was that for fourth quarter or was that for the full year.
Marc Bianchi: That was for the full year.
Marc Bianchi: Okay, if we looked at the cost around inefficiencies spin.
Marc Bianchi: Specific costs that related to.
Marc Bianchi: Had a challenge with one particular third party supplier on a machine and getting that started up which was a.
Marc Bianchi: The real challenge in the back half for us so very specific costs that we would not anticipate repeating and the reason we call that one out Mark was just because we wanted to clarify if youre looking at modeling 25 in the segments, where we're kind of the 20% to 25 jumping off point and what was the what were some of the <unk>.
Marc Bianchi: Tributary to.
Marc Bianchi: The less than less than where we want specialty products gross margin to be.
Marc Bianchi: Yes, that's exactly what I was asking so we should sort of be solving for like this impact happening in two H 'twenty four to solve for that 29% for the year and Thats kind of the clean margin going into <unk>.
Marc Bianchi: Going into towards like these issues are resolved now as we step into 25 right.
Marc Bianchi: Yes, that's right so and you thought you thought about how they flowed in 'twenty four very well there was a little bit in Q2, but it really was Q3 and Q4, so I think.
Marc Bianchi: You hit the nail in the head.
Marc Bianchi: Okay.
Marc Bianchi: Great. Thanks, so much I'll turn it back.
Marc Bianchi: Mark.
Speaker Change: Thank you and your next question comes from the line of Ivan Jr. Am from Jpmorgan. Please go ahead.
Speaker Change: Yeah, Yeah. Good morning, just a couple of quick ones for me.
Speaker Change: You had a strong.
Speaker Change: Quarter of bookings $1 5 billion five 5 billion of orders about two thirds between HTS and specialty.
Speaker Change: I was just wondering if you could just comment on the quality of the bookings and maybe the margin implications for for.
Speaker Change: For HTS and specialty in particular.
Speaker Change: Yes, good morning, Arun so.
It was a strong quarter on bookings as a whole, obviously would probably the Louisiana LNG order being of of meaningful magnitude given.
Speaker Change: Given the utilization of Ips tomorrow, and the associated LNG equipment that will provide into that was it.
Speaker Change: Key contributor to our two that cause that number.
Speaker Change: The LNG and the projects and HTS those.
Speaker Change: Bookings are.
Speaker Change: Above average gross margin generally so the way to think about that is the.
Speaker Change: Our strong Q4 bookings as a whole across the segments.
Speaker Change: We're an elevator to margin and backlog.
Speaker Change: And then on the specialty side very.
Very.
Speaker Change: Broad mix as we pointed out but I want to call out just maybe a couple of end markets in specialty that were strong performers in the fourth quarter.
Speaker Change: Carbon capture has we've seen.
Some really strong progress commercially in the market in particular on reuse cases, we've talked about a couple of those.
Speaker Change: Whether that was the bloom energy partnership or some of these other ones, but that's we're feeling we're seeing that our carbon capture technology is now being used in larger chart content applications and.
Speaker Change: With the full solution mix come generally.
Speaker Change: Improving margin.
Speaker Change: And then the other end market that I really would like to point out is our space exploration and I want to point that one out because it.
Speaker Change: It had a very strong that end market within specialty had a very strong Q4 in terms of orders.
Speaker Change: But.
Speaker Change: [laughter], an even stronger start to 2025 with approximately $60 million of orders in.
Speaker Change: This exploration market in the combined January and February 2025, and as you might imagine in.
Speaker Change: This type of end market. This is it is really low temperature high pressure applications that cannot fail and we're talking about providing storage tanks as well as heat exchangers into these into these applications. So that's another key contributor too.
Speaker Change: Two.
Speaker Change: Nice margin in backlog.
Speaker Change: Understood that's clearly a mission critical application.
Speaker Change: Hmm.
Speaker Change: Maybe just a follow up I'll just.
Speaker Change: No.
Your outlook on orders I think you highlighted around 2 billion of customer commitments that arent yet quite in the backlog could you just maybe describe the breadth and depth of those two.
Speaker Change: Medicine and thoughts on just backlog conversion.
Speaker Change: Into backlog sorry.
Speaker Change: Yep Yep, Oh, absolutely so.
Speaker Change: On that $2 billion, it's pretty broad there's a couple of larger LNG projects are in there you know you'd have the exxonmobil Mozambique rovuma in that mix. So that's not in backlog, but that's included in that.
Speaker Change: 2 billion of commitments are.
Speaker Change: And are you, yes, a couple of other in there that would be LNG related and so the timing of those.
Speaker Change: Aren't easily predictable, but you've heard what the larger folks and operators have sat around their timing.
Speaker Change: Associated with F. D. So I would anticipate you know about.
Speaker Change: Let's say half of that 2 billion is related to LNG end market and then you have a handful of carbon capture applications.
Speaker Change: That hasn't been booked because they would be dependent on government grant funding and so the timing of that will be related to when they get their funding and so that will.
Speaker Change: Likely be around clarity on funding from certain states or.
In one case, Canada.
Speaker Change: That's a small that's small handful within there so it's not a meaningful dollar amount, but I thought worth calling out because of the end market itself.
Speaker Change: And then you have a couple of hydrogen related projects that are international projects and have have site have permit and our hat and have off take and are very close on.
Speaker Change: Their financing with respect to financing that.
Speaker Change: That those would be we would anticipate in 2025, so that's right.
Speaker Change: Okay.
Speaker Change: $50 million or so associated with those guys and then the last is around a particular helium project outside of North America and that project.
Speaker Change: We have a we have the award and waiting for their their final go on their full financing. It's a very large project a few about $300 million for that particular project and do.
Speaker Change: We would anticipate that that.
Speaker Change: That one either will move forward and twenty-five or just won't move forward.
Speaker Change: Great. Thanks for the color.
Speaker Change: Thanks Harry.
Speaker Change: Thank you and your next question comes from the line of Eric Stine from Craig Hallum. Please go ahead.
Speaker Change: Hi, Joe Hi, Joe.
Speaker Change: Sure.
Speaker Change: Hey, good morning, So just sticking with the customer commitments that you just detailed I mean is it fair to say as you kind of rattle those off it doesn't sound like that is very exposed to any of the issues at the or uncertainty at the federal level, our U S federal level.
Speaker Change: So I guess.
Speaker Change: That would be first and then second you know when we think about that number is there any way to kind of compare that to what you've seen in the past I mean that obviously seems like a pretty elevated number but just looking for some context, how to compare that to other periods.
Speaker Change: Yeah. Thanks, Eric for the question, you're absolutely right on the first part which is that there's there's really very limited exposure to the decision, making at the federal U S government level.
Speaker Change: Or really at any government level I should say across across the world on these most of them really are you in the case of Exxon taking S. I D.
Speaker Change: The project in the case of the larger helium one is getting there their final full funding over the fence them. So those are that's a positive I guess in my mind, just given the the changing kind of dynamic in landscape with with people looking for certainty from the U S government that's not the driver of these.
Speaker Change: And then the second part compared to the past is that's a really interesting question.
Speaker Change: As I was thinking about it in the last couple of weeks you what.
Speaker Change: We said gosh.
Speaker Change: I can't remember what exactly what he said was probably like one and a half million or so maybe nine months ago and then yeah. We.
Speaker Change: At one point in the last six or eight months on that list was Woodside phase one so even with booking Woodside phase one we've seen that funnel increase or at least stay flat.
Speaker Change: And that is that farm income or commitment funnel and we and so that to me is is it another kind of.
Speaker Change: Tidbit of information around how we're viewing the demand profile of of this coming 12 months.
Speaker Change: Yep Okay.
Got it very helpful. And then maybe just on orders I mean, you, obviously called out Woodside and broad base I'm. Just curious I mean do you attribute any of the strength to it to a yearend push on the part of your customers or I mean is this a true indication of.
Speaker Change: You know the strength of the overall business and then is it fair to assume 2025, while there can be quarter to quarter variability book to bill above one.
Speaker Change: Yes, the book to Bill above, 1% and 25.
Speaker Change: Absolutely you actually took the words right out of my mouth.
Speaker Change: And I would say that we anticipate that Q1 book to bill will be one or above.
Speaker Change: Okay.
Speaker Change: Okay. Thank you.
Speaker Change: Thanks, Eric.
Speaker Change: Thank you and your next question comes from the line of probe Brown from Lake Street Capital markets. Please go ahead.
Speaker Change: Hi, Joe Hi, Joe.
Probe Brown: Sir just wanted to dig in a little bit on your gross margin expansion discussion, where where do you sort of see that getting to.
Probe Brown: I guess over time, where can that settle out.
Probe Brown: Yeah.
Probe Brown: And where that can be.
Probe Brown: Yes.
Probe Brown: And my my comments mid mid 30 gross margin still is arbitrary target.
Probe Brown: Nothing nothing changing on that.
Probe Brown: Yes.
Probe Brown: I think.
Speaker Change: Over time, that's it that's a journey Rob it would be the way we would describe it that we anticipate.
Speaker Change: To get beyond the mid thirties, right that that's a really truly a medium term and when we laid the medium term out that was for 2026.
Speaker Change: And I think we're in early innings of our chart business excellence activities as well.
Speaker Change: Yes, so continuing to deliver synergies as Joe mentioned, the mid Thirty's was our medium term target and we will continue to expand beyond that favorable favorable product mix across our RSO and especially and.
Speaker Change: The specific business, we're booking at age HTS.
Speaker Change: We will continue to drive those margins up over time.
Speaker Change: Yeah.
Speaker Change: Okay, Great and then I think you talked about the opa with industrial gas major.
Speaker Change: Much how much penetration is there to go in and kind of that.
Speaker Change: The customer base in terms of getting out.
Speaker Change: Okay.
Speaker Change: So the visibility there.
Speaker Change: Yeah, so on the with the majors those we've typically had over the years and when they when they come up for renewal, we work really hard with.
Speaker Change: In conjunction with them and partner with them on what their needs are and what the challenges both sides faced in the last go round and so how do we how do we optimize that for win win so on the on the major side.
Speaker Change: I think theres more opportunity to penetrate other products.
Speaker Change: Within those L T A's and that's an area that we have we're working with them on as well as penetrating more on the the aftermarket service repair aspects of those agreements.
Speaker Change: In terms of kind of other industrial gas folks see the we tend to speak to the majors, but there's also multiple different others that play in industrial gas.
Speaker Change: From the independent perspective.
Speaker Change: Independents. So these would be the non industrial gas majors folks that are more localized and regionalized industrial gas and we see a meaningful opportunity to to work more closely with them and we have been over the last year or so we've been working to develop those partnerships to move them to the L. T A's in particular.
And that is primarily a north American and European comment.
Speaker Change: We I think there's one or two real strong potentials in Europe or this in 2025.
Speaker Change: And in a handful in the United States that we could get done in.
Speaker Change: In the next 18 months or so so there's there's more opportunity for us and but would be.
Speaker Change: More of them at lower volumes, just because of the size of their businesses.
Speaker Change: Okay.
Speaker Change: Okay, great. Thank you I'll turn it over.
Speaker Change: Thank you Rob.
Speaker Change: Thank you and your next question comes from the line of Sharon Grabby from BTG. Please go ahead.
Joe Brinkman: Hey, good morning, Thanks for taking my questions I'm curious first with this hey, Joe how are you.
Speaker Change: So this moratorium saga for U S. LNG projects and you talked about growing funnel. If all these projects have been paused at the starting line so to speak and are looking to be around the same time.
Speaker Change: Good long lead equipment for these projects become sort of a bottleneck.
Speaker Change: And just to ask it all at once I guess between that and tariffs would you say pricing has it become even more flexible or should we still think about $30 million per annum and tpa for Ips tomorrow.
Speaker Change: So so it depends on the project in terms of the dollar per per M. Tpa, but you just yeah.
Speaker Change: They have heavy hydrocarbon removal or various content, but I think you can directionally, even directionally use an estimate of what we said historically per and PPA.
Speaker Change: And definitely are growing as you mentioned growing utilization of Ips EMR and.
Speaker Change: There is theres brownfield opportunities from existing operators and then there is greenfield opportunities.
Speaker Change: I think the brownfield opportunities look similar to what they looked like even during the the LNG moratorium.
Whereas greenfield opportunities are the ones that has expanded.
Speaker Change: In terms of.
Speaker Change: One that may be prior thought of themselves as we're not going to move forward and know there is demand for it and so there is an opportunity for it to move forward so with all that said.
Speaker Change: We feel good about the fact that we expanded our capacity over the course of the last seven years to be able to serve not only the LNG market, but you know the heat, it's all things energy all things molecules.
Speaker Change: In the heart and soul of that is around the heat exchanger capacity and the tank capacity.
Speaker Change: And as well as fans. So those three have been a key area of focus for us to ensure that we have the capacity and the size of the furnaces that are needed to be able to deliver these customers' needs and so I think were really well position capacity wise pipeline is growing and we will just see how these how the projects timing and which ones before.
Speaker Change: As the year and the years the next three years.
Speaker Change: Go on.
Speaker Change: Yes.
Speaker Change: That's very helpful. Thanks Jill.
Speaker Change: Thanks, Jason.
Speaker Change: Thank you and your next question comes from the line of Doug Becker from capital One. Please go ahead.
Speaker Change: Thank you.
Joe you had another strong quarter of quarters, including some large orders.
Speaker Change: Ongoing throughput initiatives, just how much of year end backlog do you now expect to convert to revenue. This year and just any context, you can provide around how much of year end 'twenty three backlog was converted last year.
Speaker Change: Yes, so we would expect to approximately 60% of year end 'twenty for backlog to convert in 2025.
Speaker Change: And if I don't have the answer to the second part of your question on 'twenty three.
Speaker Change: Definitely could we could go back in and provide that to you I would.
Speaker Change: Globally estimate.
Speaker Change: Yeah, and the 55% to 60%, but I'm not I I would need to check that figure to be to be specifically accurate on that.
Speaker Change: No that's fair.
Speaker Change: Conversion is that a function of the throughput initiatives or is it just the type of projects.
Speaker Change: The backlog.
Speaker Change: The throughput initiatives are key to that and also in particular shops I should say like the compressor shops is an example of this group compressor shops in Europe.
Speaker Change: There was some bottleneck challenges there, we're getting more and more throughput in the heat exchanger shops.
Speaker Change: In particular, the cold box shops, so those would be the three that really can drive improved backlog conversion with the efforts that we've done so far.
Speaker Change: We still have more to do on on throughput improvements in 'twenty five and the teams are really working hard on that but that that's a contributor a definite contributor to that and then you know and then there's also the something like the large LNG projects like the wood side, where we have pretty good visibility on the timing of that revenue and the associated.
Speaker Change: Engineering associated.
Speaker Change: Milestones with that particular project as an example, so it's kind of a combo of both but I really want to see this self help throughput start to flow through.
Speaker Change: Throw through the top line here in 2025.
Speaker Change: Got it and then just another one on trying to get more comfortable with the Cts outlook like the backlog was down 20%.
Speaker Change: Last year and from the outside looking in it seems like a very high hurdle to get over.
Speaker Change: The LTA with the industrial gas majors is that in isolation enough to support growth in Cts This year or do you need some of those smaller independents to.
Speaker Change: To come in to actually see growth this year.
Speaker Change: We did not rely our forecast does not rely on some of the small independents to come in but it's not that one in particular LTA either that is the driver of the growth it's kind of a broad based global.
Speaker Change: Look at where the where the industrial gas guys are spending their money and then the other part of the answer Doug is just too there is a handful of these.
Speaker Change: These projects that.
Speaker Change: We are a bit larger in 'twenty three that we have visibility to similarly sized ones for 25 with two of those being anticipated to come in in the.
Speaker Change: The first half of 'twenty five as well so I think the L. P. As a nice contributor to it but also just the general kind of demand profile globally is a is a key contributor to our outlook also.
Speaker Change: First couple of months start to the year informed our thought process around it as well.
Speaker Change: Yeah, I would just add on the industrial gas side, there are ebbs and flows to their capex cycles.
Speaker Change: Some lumpiness to their to their ordering practices, so that can contribute on a quarter over quarter basis.
Speaker Change: Got it thank you.
Doug: Thanks, Doug.
Speaker Change: Thank you and your next question comes from the line of Keith Clean Donovan for Goldman Sachs. Please go ahead.
Speaker Change: Good morning.
Speaker Change: The question I was one good morning.
Speaker Change: How youre seeing hydrogen end market, especially with.
Speaker Change: Color that we received from the <unk> 45 of the rules early January how are you seeing that 7% to 10% growth through 2030 that you highlighted during our capital markets day.
Speaker Change: Yeah. Thanks for the question so I.
Speaker Change: I think the hydrogen and market at times get pigeonholed into being a U S discussion and for US. It is a much more global discussion we've seen.
Speaker Change: As I mentioned in the script, we saw a strong year in Europe in particular on the hydrogen side, which for US was hum storage tanks in compression. So those are kind of the two primary products that went into those applications and we are seeing continued continued demand in hydrogen.
Speaker Change: From a mostly the liquefaction side globally as well.
Speaker Change: In terms of the 45 V until the clarifications that came out well what I'd say to that is it the market and the operators that we're waiting they really I mean, the IRA was it was an announcement in August 2022, and there was no clarity until the 45 V. A clarification came out in the last couple of months.
Speaker Change: And so there was really two and a half years of these guys waiting for those clarifications almost view it as a catalyst in a positive way to to move the folks who can't do it out of the way and those who really are.
Speaker Change: You have a real projects here in real funding here and can utilize.
Speaker Change: The structure as it's been laid out positively as as a good thing for the United States and in the industry and I do think from a global perspective that you.
Speaker Change: You know that high single digits to 10% for the care between now and 2030 is is is very achievable for the market and and for our company to play in that both gaseous and liquid end markets.
Speaker Change: Thanks for the color I'll turn it back.
Speaker Change: Thank you.
Speaker Change: Thank you Anne does answer your question and answer session I will now hand, the call back to Mr. Levine for any closing remarks.
Speaker Change: Thank you Anna and thank you everyone for joining us. This morning, we look forward to the coming months to provide further updates have a great rest of the day.
Speaker Change: Okay.
Speaker Change: Thank you and this concludes today's call. Thank you for participating you may all disconnect.
Speaker Change: Okay.
Speaker Change: [noise].