UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2019~~March 31, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-11442

CHART INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)



Delaware			34-1712937
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

3055 Torrington Drive, Ball Ground, Georgia 30107

(Address of principal executive offices) (ZIP Code)

(770) 721-8800

(Registrant's telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	GTLS	The NASDAQ Stock Market LLC
		(Nasdaq Global Select Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x

~~At October 14, 2019,~~As of April 20, 2020, there were ~~35,798,979~~35,955,740 outstanding shares of the Company’s ~~Common Stock,~~common stock, par value $0.01 per share.

CHART INDUSTRIES, INC.

INDEX




Part I. Financial Information

Item 1. Financial Statements	Page

Condensed Consolidated Balance Sheets as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	3

Condensed Consolidated Statements of Income and Comprehensive ~~Income~~Loss for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	4

Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	5

Condensed Consolidated Statements of Equity for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	6

Notes to the Condensed Consolidated Financial Statements	87

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3325

Item 3. Quantitative and Qualitative Disclosures About Market Risk	4734

Item 4. Controls and Procedures	4835

Part II. Other Information

Item 1. Legal Proceedings	4836

Item 1A. Risk Factors	4936

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	4936

Item 4. Mine Safety Disclosures	4937

Item 6. Exhibits	5038

Signatures	5139

Table of Contents

PART I. FINANCIAL INFORMATION


Item 1.	Financial Statements

CHART INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in millions, except per share amounts)


	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	80.7		$	118.1		$	89.3		$	119.0
Accounts receivable, less allowances of $13.5 and $8.5, respectively	224.5			194.8
Accounts receivable, less allowances of $8.2 and $8.8, respectively							195.1			202.6
Inventories, net	234.9			233.1			235.4			219.4
Unbilled contract revenue	81.6			54.5			88.5			86.1
Prepaid expenses	17.2			14.0			15.9			17.8
Other current assets	45.0			47.2			26.9			28.7
Total Current Assets	683.9			661.7			651.1			673.6
Property, plant, and equipment, net	398.9			361.1			399.3			404.6
Goodwill	798.0			520.7			841.2			844.9
Identifiable intangible assets, net	577.8			330.4			512.4			529.1
Investments	15.9			2.8			8.1			13.4
Other assets	23.3			21.0			10.9			15.8
TOTAL ASSETS	$	2,497.8		$	1,897.7		$	2,423.0		$	2,481.4

LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	120.7		$	125.5		$	120.3		$	125.0
Customer advances and billings in excess of contract revenue	120.5			130.0			124.3			127.8
Accrued salaries, wages, and benefits	41.7			46.6			28.8			41.5
Accrued income taxes							13.0			11.8
Current portion of warranty reserve	10.4			8.6			10.7			10.4
Short-term debt and current portion of long-term debt	15.9			11.2			12.9			16.3
Operating lease liabilities, current	6.8			—			5.4			6.3
Other current liabilities	58.4			44.7			42.7			39.2
Total Current Liabilities	374.4			366.6			358.1			378.3
Long-term debt	792.5			533.2			741.5			761.0
Long-term deferred tax liabilities	68.2			76.4			52.6			52.1
Accrued pension liabilities	10.7			11.7			10.0			10.2
Operating lease liabilities, non-current	28.7			—			26.6			27.8
Other long-term liabilities	20.2			20.8			19.3			19.6
Total Liabilities	1,294.7			1,008.7			1,208.1			1,249.0

Equity
Common stock, par value $0.01 per share – 150,000,000 shares authorized, 35,797,441 and 31,363,650 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively	0.4			0.3
Common stock, par value $0.01 per share – 150,000,000 shares authorized, 35,950,085 and 35,799,994 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively							0.4			0.4
Additional paid-in capital	759.5			460.2			766.0			762.8
Treasury stock; 760,782 shares at March 31, 2020							(19.3		)	—
Retained earnings	487.9			453.9			508.8			500.3
Accumulated other comprehensive loss	(49.3		)	(29.9		)	(45.8		)	(35.9		)
Total Chart Industries, Inc. Shareholders’ Equity	1,198.5			884.5			1,210.1			1,227.6
Noncontrolling interests	4.6			4.5			4.8			4.8
Total Equity	1,203.1			889.0			1,214.9			1,232.4
TOTAL LIABILITIES AND EQUITY	$	2,497.8		$	1,897.7		$	2,423.0		$	2,481.4

See accompanying notes to these unaudited condensed consolidated financial statements.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE ~~INCOME~~LOSS

(Dollars and shares in millions, except per share amounts)

See accompanying notes to these unaudited condensed consolidated financial statements.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in millions)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
OPERATING ACTIVITIES
Net income	$	34.3		$	42.1		$	8.5		$	1.0
Less: Income from discontinued operations	—			4.7
Income from continuing operations	34.3			37.4
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	56.1			36.9			23.9			16.0
Interest accretion of convertible notes discount	5.7			7.3			1.9			1.8
Employee share-based compensation expense	6.4			3.5			2.9			2.4
Other operating activities	3.3			1.3
Financing costs amortization							1.0			0.4
Unrealized foreign currency transaction gain							—			(0.3		)
Unrealized loss on investment in equity securities							4.8			—
Other non-cash operating activities							3.2			2.5
Changes in assets and liabilities, net of acquisitions:
Accounts receivable	1.6			23.5			7.5			(12.2		)
Inventories	(6.2		)	(28.7		)	(16.1		)	(10.4		)
Unbilled contract revenues and other assets	(11.8		)	10.2			8.4			(11.2		)
Accounts payable and other liabilities	(19.7		)	(25.7		)	(17.0		)	(20.7		)
Customer advances and billings in excess of contract revenue	(14.4		)	(2.1		)	(3.5		)	(2.5		)
Net Cash Provided By Operating Activities	55.3			63.6
Net Cash Provided By (Used In) Operating Activities							25.5			(33.2		)
INVESTING ACTIVITIES
Capital expenditures							(10.3		)	(5.9		)
Acquisition of businesses, net of cash acquired	(603.9		)	(12.5		)	—			(2.8		)
Capital expenditures	(26.7		)	(26.4		)
Investments⁽¹⁾	(3.3		)	—
Government grants	0.5			0.8			0.1			(0.2		)
Net Cash Used In Investing Activities	(633.4		)	(38.1		)	(10.2		)	(8.9		)
FINANCING ACTIVITIES
Borrowings on revolving credit facilities	202.6			188.3			64.5			18.8
Repayments on revolving credit facilities	(384.2		)	(123.3		)	(84.7		)	(27.0		)
Repurchase of convertible notes	—			(57.1		)
Borrowings on term loan	450.0			—
Repayments on term loan	—			(3.0		)	(2.8		)	—
Payments for debt issuance costs	(13.6		)	(0.2		)
Proceeds from exercise of stock options	9.4			5.4			2.0			8.3
Common stock repurchases	(2.8		)	(2.4		)
Payments for equity issuance costs	(9.5		)	—
Issuance of shares	295.8			—
Other	(0.5		)	(0.4		)
Net Cash Provided By Financing Activities	547.2			7.3
DISCONTINUED OPERATIONS
Cash Provided By Operating Activities ⁽²⁾	—			1.5
Cash Used In Investing Activities ⁽³⁾	—			(0.8		)
Cash Provided By Discontinued Operations	—			0.7
Common stock repurchases ⁽¹⁾							(19.3		)	—
Common stock repurchases from share-based compensation plans							(1.7		)	(2.7		)
Net Cash Used In Financing Activities							(42.0		)	(2.6		)
Effect of exchange rate changes on cash and cash equivalents	(6.5		)	(6.7		)	(3.0		)	(1.5		)
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	(37.4		)	26.8
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period ⁽⁴⁾	119.1			131.4
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD ⁽⁴⁾	$	81.7		$	158.2
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents							(29.7		)	(46.2		)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period ⁽²⁾							120.0			119.1
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD ⁽²⁾							$	90.3		$	72.9

See accompanying notes to these unaudited condensed consolidated financial statements.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(Dollars in millions)

~~Table of Contents~~


⁽¹⁾	Includes $19.3 in shares repurchased through our share repurchase program.

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive
(Loss) Income Non-controlling Interests

Shares
Outstanding
Amount
Retained
Earnings

Total
Equity
Balance at December 31, 2017 30.81
$ 0.3
$ 445.7
$ 364.3
$ (8.1 ) $ 3.0
$ 805.2
Net income —
—
—
5.8
—
0.5
6.3
Cumulative effect of accounting change —
—
—
2.3
—
—
2.3
Other comprehensive income —
—
—
—
12.4
—
12.4
Share-based compensation expense —
—
3.2
—
—
—
3.2
Common stock issued from share-based compensation plans 0.20
—
1.3
—
—
—
1.3
Common stock repurchases (0.04 ) —
(2.2 ) —
—
—
(2.2 )
Other —
—
—
—
—
0.1
0.1
Balance at March 31, 2018 30.97
0.3
448.0
372.4
4.3
3.6
828.6
Net income —
—
—
12.3
—
0.8
13.1
Other comprehensive income —
—
—
—
(21.4 ) —
(21.4 )
Share-based compensation expense —
—
0.1
—
—
—
0.1
Common stock issued from share-based compensation plans 0.03
—
0.4
—
—
—
0.4
Common stock repurchases —
—
(0.1 ) —
—
—
(0.1 )
Dividend distribution to noncontrolling interest —
—
—
—
—
(0.4 ) (0.4 )
Other —
—
—
—
—
(0.2 ) (0.2 )
Balance at June 30, 2018 31.00
0.3
448.4
384.7
(17.1 ) 3.8
820.1
Net income —
—
—
22.2
—
0.5
22.7
Other comprehensive income —
—
—
—
(6.1 ) —
(6.1 )
Share-based compensation expense —
—
0.8
—
—
—
0.8
Common stock issued from share-based compensation plans 0.21
—
3.7
—
—
—
3.7
Common stock repurchases (0.01 ) —
(0.1 ) —
—
—
(0.1 )
Other —
—
—
—
—
(0.1 ) (0.1 )
Balance at September 30, 2018 31.20
$ 0.3
$ 452.8
$ 406.9
$ (23.2 ) $ 4.2
$ 841.0



	Common Stock				Additional Paid-in Capital					Accumulated Other Comprehensive Loss			Non-controlling Interests
	Shares Outstanding		Amount		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Non-controlling Interests		Total Equity
Balance at December 31, 2018	31.36		$	0.3	$	460.2		$	453.9	$	(29.9	)	$	4.5	$	889.0
Net income	—		—		—			0.9		—			0.1		1.0
Other comprehensive (loss) income	—		—		—			—		(4.6		)	0.1		(4.5		)
Share-based compensation expense	—		—		2.4			—		—			—		2.4
Common stock issued from share-based compensation plans	0.41		—		8.3			—		—			—		8.3
Common stock repurchases from share-based compensation plans	(0.04	)	—		(2.7		)	—		—			—		(2.7		)
Balance at March 31, 2019	31.73		$	0.3	$	468.2		$	454.8	$	(34.5	)	$	4.7	$	893.5

See accompanying notes to these unaudited condensed consolidated financial statements.

Table of Contents

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – ~~September 30, 2019~~March 31, 2020

(Dollars and shares in millions, except per share amounts)

NOTE 1 — Basis of Preparation

The accompanying unaudited condensed consolidated financial statements of Chart Industries, Inc. and its consolidated subsidiaries (herein referred to as the “Company,” “Chart,” “we,” “us,” or “our”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for annual financial statements. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2019.~~

On July 1, 2019, we completed the acquisition of Harsco Corporation’s Industrial Air-X-Changers (“AXC”). AXC is a leading supplier of custom engineered and manufactured air cooled heat exchangers for the natural gas compression and processing industry and refining and petrochemical industry in the United States. See Note 10, “Business Combinations”, for further information regarding the acquisition of AXC.2020.

Nature of Operations: We are a leading ~~independent~~diversified global manufacturer of highly engineered equipment servicing multiple market applications in ~~Energy~~energy and ~~Industrial Gas.~~industrial gas. Our unique product portfolio is used throughout the liquid gas supply chain in the production, storage, distribution and end-use of atmospheric, hydrocarbon, and industrial gases. Chart has domestic operations located across the United States and an international presence in Asia, Australia, Europe and the Americas.

Principles of Consolidation: The unaudited condensed consolidated financial statements include the accounts of Chart Industries, Inc. and its subsidiaries. Intercompany accounts and transactions are eliminated in consolidation.

Reclassifications: Certain reclassifications have been made to prior year financial information in the unaudited condensed consolidated financial statements in order to conform to the reportable segments restructuring as further discussed in Note 3,2, “Reportable Segments.”

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. These estimates may also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. Furthermore, we considered the impact of the COVID-19 pandemic on the use of estimates and assumptions used for financial reporting and determined that there was no adverse material impact to our results of operations for the first quarter of 2020. While our production is considered “essential” in all locations we operate in, we have experienced, and may experience in the future, temporary facility closures while awaiting appropriate government approvals in certain jurisdictions. The COVID-19 outbreak could also disrupt our supply chain and materially adversely impact our ability to secure supplies for our facilities, which could materially adversely affect our operations. There may also be long-term effects on our customers in and the economies of affected countries. As a result of these uncertainties, actual results could differ from those estimates and assumptions. If the economy or markets in which we operate remain weak or deteriorate further, our business, financial condition and results of operations may be materially and adversely impacted.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law in the United States. The CARES Act, among other things, includes modifications to net operating loss carryforwards provisions and the net interest expense deduction, and deferment of social security tax payments. We are currently evaluating the provisions of the CARES Act and how certain elections may impact our financial position, results of operations, and disclosures if elected.

Share Repurchase Program: On March 11, 2020, our Board of Directors authorized a share repurchase program for up to $75 million of the Company’s common stock over the next twelve months through various means, including open market transactions, block purchases, privately negotiated transactions or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. During the three months ended March 31, 2020, we repurchased 0.76 shares of our common stock at an average price of $25.40 per share. We suspended the program on March 20, 2020 in light of uncertainty resulting from the COVID-19 pandemic and the desire to conserve cash resources. As of March 31, 2020, we had approximately $55.7 available for additional repurchases under the share repurchase program.

Recently Issued Accounting Standards (Not Yet Adopted): In January 2020, the FASB issued ASU 2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815).” This ASU clarifies the interactions between the measurement alternative in Topic 321, the equity method of accounting in Topic 323 and the application of guidance for certain forward contracts and purchased options that upon settlement or exercise would be accounted for under the equity method of accounting in Topic 815. This guidance is effective for fiscal years ending

Table of Contents

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

after December 15, 2020. Early adoption is permitted. We are currently assessing the effect that this ASU will have on our financial position, results of operations, and disclosures.

Recently Adopted Accounting Standards: In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” This ASU clarifies the accounting treatment for implementation costs for cloud computing arrangements (hosting arrangements) that is a service contract. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. ~~Early~~We adopted this guidance effective January 1, 2020. The adoption ~~is permitted. We are currently assessing the effect that~~of this ~~ASU will~~guidance did not have ona material impact our financial position, results of operations ~~and~~or disclosures.

In August 2018, the FASB issued ASU 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.” This ASU adds, modifies and clarifies several disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This guidance is effective for fiscal years ending after December 15, 2020. ~~Early~~We early adopted this guidance effective January 1, 2020. The adoption ~~is permitted. We are currently assessing the effect that~~of this ~~ASU will~~guidance did not have a significant impact on our ~~financial position, results of operations,~~first quarter 2020 interim disclosures and are not expected to have a significant impact on our annual disclosures.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, “Fair Value Measurement.” This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. ~~Early~~We adopted this guidance effective January 1, 2020. The adoption ~~is permitted. We are currently assessing the effect that~~of this ~~ASU will have on~~guidance did not impact our financial position, results of operations ~~and~~or disclosures.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and subsequently issued additional guidance that modified ASU 2016-13. ASU 2016-13 and

~~Table of Contents~~

~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

the subsequent modifications are identified as Accounting Standards Codification (“ASC”) 326.” The standard requires an entity to change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” to a “current expected credit loss” model. The standard ~~will be~~is effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. ~~Early adoption is permitted.~~ We ~~are currently assessing the effect that ASC 326 will have on our financial position, results of operations, and disclosures.~~

~~Recently Adopted Accounting Standards:~~ ~~In July 2018, the FASB issued ASU 2018-09, “Codification Improvements.” This ASU makes amendments to multiple codification Topics. The transition and~~adopted this guidance effective date guidance are based on the facts and circumstances of each amendment. Some of the amendments in this ASU do not require transition guidance and were effective upon issuance of this ASU. However, many of the amendments in this ASU had transition guidance with effective dates for annual periods beginning after December 15, 2018.January 1, 2020. The adoption of this guidance did not have a material impact on our financial position, results of operations or disclosures.

In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” The FASB issued the update We maintain an allowance for doubtful accounts to provide ~~amended guidance to “allow a reclassification from accumulated other comprehensive income to retained earnings~~ for ~~stranded tax effects resulting from~~ the ~~Tax Cuts~~estimated amount of receivables that will not be collected as discussed in significant accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2019. In addition, we estimate expected credit losses based on historical loss information then adjust the estimates based on current, reasonable and ~~Jobs Act.” Additionally, under~~supportable forecast economic conditions.

NOTE 2 — Reportable Segments

As reported in our Annual Report on Form 10-K for the ~~new guidance an entity was required to provide certain disclosures regarding stranded tax effects. The guidance was effective for fiscal years beginning after~~year ended December ~~15, 2018, including interim periods within those years. We adopted this guidance effective January 1, 2019. The adoption~~31, 2019, the structure of ~~this guidance did not impact~~ our ~~financial position, results~~internal organization is divided into the following reportable segments, which are also our operating segments: Distribution and Storage Eastern Hemisphere (“D&S East”), Distribution and Storage Western Hemisphere (“D&S West”), Energy & Chemicals Cryogenics (“E&C Cryogenics”), and Energy & Chemicals FinFans (“E&C FinFans”).

Our D&S East segment has principal operations in Europe and Asia and primarily serves the geographic regions of ~~operations or disclosures.~~

~~In August 2017, the FASB issued ASU 2017-12, “Derivatives~~Europe, Middle East and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” The ASU expands and enhances hedge accounting to become more closely aligned with an entity’s risk management activities through hedging strategies. The ASU provides changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge resultsAsia. Our D&S West segment has principal operations in the ~~financial statements~~United States and ~~creates more transparency~~Latin America and ~~better understandability~~primarily serves the Americas geographic region. Our D&S West segment also includes cryobiological storage manufacturing and distribution operations in the U.S., Europe and Asia, which serve customers around ~~how economic results~~the world. E&C Cryogenics supplies critical engineered equipment and systems used in the separation, liquefaction, and purification of hydrocarbon and industrial gases that span gas-to-liquid applications. The E&C FinFans segment is focused on our unique and broad product offering and capabilities in air cooled heat exchangers (“ACHX”) and fans. Corporate includes operating expenses for executive management, accounting, tax, treasury, corporate development, human resources, information technology, investor relations, legal, internal audit, and risk management. Corporate support functions are not currently allocated to the segments. All prior period amounts presented in the financial statements. In addition, the new guidance makes certain targeted improvements to ease the application of accounting guidance relative to hedge effectiveness. This guidance was applied prospectively for annual periods and interim periods beginning after December 15, 2018. We adopted this guidance effective January 1, 2019. The adoption of this guidance did not impact our financial position, results of operations or disclosures.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” and other subsequent amendments collectively identified as ASC 842, related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Effective January 1, 2019, (the “Commencement Date”) we adopted the new lease accounting standard using the modified retrospective transition option of applying the new standard at the adoption date for all leases with terms greater than 12 months. The adoption of the new standard resulted in the recording of operating ROU assets, primarily consisting of leased facilities and equipment and operating lease liabilities of $34.8 as of the Commencement Date. The adoption did nottables below have ~~a material impact~~been reclassified based on our ~~unaudited condensed~~current reportable segments.

We evaluate performance and allocate resources based on operating income as determined in our consolidated ~~statement~~statements of income and comprehensive ~~income or cash flows related~~loss.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to ~~existing leases as of the Commencement Date. As a result, there was no cumulative-effect adjustment.~~Unaudited Condensed Consolidated Financial Statements – March 31, 2020

~~We elected certain practical expedients~~(Dollars and as such did not reassess the following: 1) whether any expired or existing contracts are or contain leases, 2) lease classification for any expired or existing leases, 3) initial direct costs for any expired or existing leases and 4) whether existing or expired land easements are or contain leases. However, we will evaluate new or modified land easements under the new guidance after the Commencement Date. We also elected the practical expedient to not separate lease and non-lease components. In addition, we implemented internal controls and key system functionality to enable the preparation of financial information on adoption.shares in millions, except per share amounts) – Continued

At lease inception, we determine if an arrangement is a lease and if it includes options to extend or terminate the lease if it is reasonably certain that the options will be exercised. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Operating leases are recognized as ROU assets and are included within property, plant and equipment, net and lease liabilities are included in operating lease liabilities, current and operating lease liabilities, non-current in our unaudited condensed consolidated balance sheet as of the Commencement Date and at September 30, 2019. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities

Segment Financial Information



	Three Months Ended March 31, 2020
	D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations			Corporate			Consolidated
Sales to external customers	$	70.0	$	111.6	$	62.2	$	80.7	$	(3.4	)	$	—		$	321.1
Depreciation and amortization expense	3.6		3.0		3.8		13.1		—			0.4			23.9
Operating income (loss) ^{(1) (2)}	6.9		26.5		8.7		1.1		—			(19.7		)	23.5
Capital expenditures	5.1		1.7		1.0		0.5		—			2.0			10.3



	Three Months Ended March 31, 2019
	D&S East			D&S West		E&C Cryogenics			E&C FinFans		Intersegment Eliminations			Corporate			Consolidated
Sales to external customers	$	68.7		$	118.0	$	35.1		$	70.5	$	(3.0	)	$	—		$	289.3
Depreciation and amortization expense	4.2			2.9		4.5			4.1		—			0.3			16.0
Operating income (loss) ^{(1) (2)}	(2.3		)	25.6		(10.7		)	9.4		(1.1		)	(16.3		)	4.6
Capital expenditures	1.0			1.2		2.7			0.5		—			0.5			5.9

_______________


⁽¹⁾	Restructuring costs for the:

three months ended March 31, 2020 were ~~recognized on the Commencement Date based on the present value of lease~~$5.2 ($1.0 - D&S East), $0.8 - D&S West, $0.4 - E&C Cryogenics, $2.4 - E&C FinFans, 0.6 - Corporate).

three months ended March 31, 2019 were $7.4 ($2.4 - D&S East, $0.3 - D&S West, $3.4 - E&C Cryogenics, $1.1 - E&C FinFans, $0.2 - Corporate).


⁽²⁾	Corporate includes transaction-related costs of: (includes costs associated with business development and other one-time transactions)


•	$0.9 for the three months ended March 31, 2019.

Product Sales Information



	Three Months Ended March 31, 2020
	D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations			Consolidated
Natural gas processing (including petrochemical) and industrial gas applications	$	—	$	—	$	21.6	$	62.0	$	(0.3	)	$	83.3
Liquefied natural gas (LNG) applications	19.7		18.9		33.3		8.6		(1.1		)	79.4
HVAC, power and refining applications	—		—		7.3		10.1		(0.1		)	17.3
Bulk industrial gas applications	39.0		32.4		—		—		(0.9		)	70.5
Packaged gas industrial applications	11.1		41.1		—		—		(0.9		)	51.3
Cryobiological storage	0.2		19.2		—		—		(0.1		)	19.3
Total	$	70.0	$	111.6	$	62.2	$	80.7	$	(3.4	)	$	321.1

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – ~~September 30, 2019~~March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

~~payments~~



	Three Months Ended March 31, 2019
	D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations			Consolidated
Natural gas processing (including petrochemical) and industrial gas applications	$	—	$	—	$	25.9	$	51.5	$	—		$	77.4
Liquefied natural gas (LNG) applications	12.1		22.1		4.2		10.4		—			48.8
HVAC, power and refining applications	—		—		5.0		8.6		—			13.6
Bulk industrial gas applications	40.2		37.8		—		—		(0.3		)	77.7
Packaged gas industrial applications	16.4		36.1		—		—		(1.0		)	51.5
Cryobiological storage	—		22.0		—		—		(1.7		)	20.3
Total	$	68.7	$	118.0	$	35.1	$	70.5	$	(3.0	)	$	289.3



Total Assets	March 31, 2020		December 31, 2019
D&S East	$	511.9	$	528.6
D&S West	423.3		414.9
E&C Cryogenics	428.1		430.3
E&C FinFans	1,032.3		1,028.0
Corporate	27.4		79.6
Total	$	2,423.0	$	2,481.4

NOTE 3 — Revenue

Disaggregation of Revenue

The following table represents a disaggregation of revenue by timing of revenue along with the reportable segment for each category:



	Three Months Ended March 31, 2020
	D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations			Consolidated
Point in time	$	59.1	$	102.4	$	—	$	21.2	$	(2.7	)	$	180.0
Over time	10.9		9.2		62.2		59.5		(0.7		)	141.1
Total	$	70.0	$	111.6	$	62.2	$	80.7	$	(3.4	)	$	321.1



	Three Months Ended March 31, 2019
	D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations			Consolidated
Point in time	$	63.9	$	107.4	$	0.2	$	18.8	$	(3.0	)	$	187.3
Over time	4.8		10.6		34.9		51.7		—			102.0
Total	$	68.7	$	118.0	$	35.1	$	70.5	$	(3.0	)	$	289.3

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

Refer to Note 2, “Reportable Segments,” for a table of revenue disaggregated by product application along with the reportable segment for each category.

Contract Balances

The following table represents changes in our contract assets and contract liabilities balances:



	March 31, 2020		December 31, 2019		Year-to-date Change ($)			Year-to-date Change (%)
Contract assets
Accounts receivable, net of allowances	$	195.1	$	202.6	$	(7.5	)	(3.7	)%
Unbilled contract revenue	88.5		86.1		2.4			2.8	%

Contract liabilities
Customer advances and billings in excess of contract revenue	$	124.3	$	127.8	$	(3.5	)	(2.7	)%
Long-term deferred revenue	0.7		0.8		(0.1		)	(12.5	)%

Revenue recognized for the three months ended March 31, 2020 and 2019, that was included in the contract liabilities balance at the beginning of each year was $17.1 and $37.0, respectively. The amount of revenue recognized during the three months ended March 31, 2020 from performance obligations satisfied or partially satisfied in previous periods as a result of changes in the estimates of variable consideration related to long-term contracts, was not significant.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of firm signed purchase orders or other written contractual commitments from customers for which work has not been performed, or is partially completed, and excludes unexercised contract options and potential orders. As of March 31, 2020, the estimated revenue expected to be recognized in the future related to remaining performance obligations was $732.5. We expect to recognize revenue on approximately 84% of the remaining performance obligations over the ~~lease term.~~next 12 months and with the remaining over the next few years thereafter.

NOTE 4 — Investments

The following table summarizes the components of investments:



	March 31, 2020		December 31, 2019
Investment in equity securities	$	2.1	$	6.9
Equity investments	6.0		6.5
Total investments	$	8.1	$	13.4

Investment in equity securities

During the third quarter of 2019, we made an investment in Stabilis Energy, Inc. (“Stabilis”) by converting $7.0 of a note receivable from Stabilis into an investment in their company stock. As ~~most~~ of March 31, 2020, the value of the investment was $2.1, which reflects a $4.8 unrealized loss upon conversion and subsequent mark-to-market. Gains and losses for this investment in equity securities were recorded in unrealized loss on investment in equity securities on the consolidated statement of income and comprehensive loss during the three months ended March 31, 2020.

We categorize our ~~leases~~financial assets and liabilities that are recorded at fair value into a hierarchy based on whether the inputs to valuation techniques are observable to unobservable. Level 2 inputs represent other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. The Stabilis investment is measured at fair value on the condensed consolidated balance sheet as of March 31, 2020 using Level 2 inputs.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

Equity method accounting investments

Our equity investments accounted for under the equity method of accounting include a 50% ownership interest in a joint venture with Hudson Products de Mexico S.A. de CV which totaled $2.9 at March 31, 2020 and December 31, 2019. This investment is operated and managed by our joint venture partner and as such, we do not ~~provide an implicit rate,~~have control over the joint venture and therefore is not consolidated. Our equity in earnings from this investment were not material for both the three months ended March 31, 2020 and 2019. Additionally, we ~~used our incremental borrowing rate based on~~have a 25% ownership interest in Liberty LNG which we invested in during the ~~information available on~~third quarter of 2019 which totaled $2.7 and $3.3 at March 31, 2020 and December 31, 2019, respectively.Earnings for the ~~Commencement Date in determining the present value of lease payments.~~three months ended March 31, 2020 were not material.

NOTE5 — Leases

As of ~~September 30, 2019,~~March 31, 2020, operating ~~ROU~~right-of-use (“ROU”) assets and lease liabilities were ~~$34.9~~$31.9 and ~~$35.5~~$32.0 ($~~6.8~~5.4 of which was current), respectively. The weighted-average remaining term for lease contracts was ~~6.9~~6.5 years at ~~September 30, 2019,~~March 31, 2020, with maturity dates ranging from ~~September 2019~~May 2020 to ~~August 2027.~~February 2029. The weighted-average discount rate was 4.7% at ~~September 30, 2019.~~March 31, 2020.

We incurred $3.1 and $2.0 of rental expense under operating leases for the quarters ended March 31, 2020 and 2019, respectively. Certain operating leases contain rent escalation clauses and lease concessions that require additional rental payments in the later years of the term. Rent expense for these types of leases is recognized on a straight-line basis over the minimum lease term. We incurred $2.7 and $2.0 of rental expense under operating leases for the three months ended September 30, 2019 and 2018, respectively. Rental expense under operating leases for the nine months ended September 30, 2019 and 2018 was $6.8 and $6.2, respectively. Adjustments for straight-line rental expense for the respective periods was not material and as such, the majority of expense recognized was reflected in cash used in operating activities for the respective periods. This expense consisted primarily of payments for base rent on building and equipment leases. Payments related to short-term lease costs and taxes and variable service charges on leased properties were immaterial. In addition, we have the right, but no obligation, to renew certain leases for various renewal terms.

The following table summarizes future minimum lease payments for non-cancelable operating leases as of ~~September 30, 2019 and December~~March 31, ~~2018:~~2020:


	September 30, 2019		December 31, 2018
2019 ⁽¹⁾	$	1.9	$	7.9
2020	7.1		6.9		$	6.0
2021	6.4		5.7		6.5
2022	6.1		5.3		6.1
2023	5.5		4.6		5.5
Thereafter ⁽²⁾	13.1		9.2
2024					5.3
Thereafter ⁽¹⁾					7.9
Total future minimum lease payments	$	40.1	$	39.6	$	37.3

_______________


⁽¹⁾	~~Amount as of September 30, 2019 represents operating lease payments for the remaining~~ ~~three~~ ~~months,~~ ~~September 2019~~ ~~through December 2019.~~


⁽²⁾	As of ~~September 30, 2019,~~March 31, 2020, future minimum lease payments for non-cancelable operating leases for period subsequent to ~~2023~~2024 relate to 107 leased facilities.

~~NOTE 2 — Discontinued Operations~~

On December 20, 2018, we closed the sale of our oxygen-related products business to NGK SPARK PLUG CO., LTD. (the “Divestiture”). As a result of the Divestiture, the asset group, which included our respiratory and on-site generation systems businesses, qualified for discontinued operations for the three and nine months ended September 30, 2018. As such, the financial results of the respiratory therapy and on-site generation systems businesses are reflected in our unaudited condensed consolidated statements of income and comprehensive income as discontinued operations for the prior-year periods presented.

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

~~Summarized Financial Information of Discontinued Operations~~

~~The following table represents income from discontinued operations, net of tax:~~

Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
Sales $ 43.0
$ 120.6
Cost of sales 31.3
87.1
Selling, general and administrative expenses 6.8
21.4
Amortization expense 0.6
1.8
Operating income ⁽¹⁾
4.3
10.3
Other loss, net 0.4
0.6
Income before income taxes 3.9
9.7
Income tax expense 3.2
5.0
Income from discontinued operations, net of tax $ 0.7
$ 4.7

~~_______________~~


⁽¹⁾	~~Includes depreciation expense of $0.4 and $1.3 for the three and nine months ended September 30, 2018, respectively.~~

NOTE 36 — ~~Reportable Segments~~Inventories

As reported in our Annual Report on Form 10-K for the year ended December 31, 2018, the structure of our internal organization was divided into the following reportable segments, which were also our operating segments: Energy & Chemicals (“E&C”), Distribution and Storage Western Hemisphere (“D&S West”) and Distribution and Storage Eastern Hemisphere (“D&S East”). Corporate includes operating expenses for executive management, accounting, tax, treasury, corporate development, human resources, information technology, investor relations, legal, internal audit, and risk management. Corporate support functions are not currently allocated to the segments.

Upon closing of our acquisition of AXC (see Note 10, “Business Combinations” for more information), effective July 1, 2019, we changed our reportable segments from 3 segments to 4 segments: (i) D&S East, (ii) D&S West, (iii) Energy & Chemicals Cryogenics (“E&C Cryogenics”), and (iv) Energy & Chemicals FinFans (“E&C FinFans”). AXC was combined with Chart’s Hudson Products business and Chart Cooler Services businesses from the prior E&C segment to create a new segment called E&C FinFans. The E&C FinFans segment is focused on our unique and broad product offering and capabilities in air cooled heat exchangers (“ACHX”) and fans. E&C Cryogenics supplies mission critical engineered equipment and systems used in the separation, liquefaction, and purification of hydrocarbon and industrial gases that span gas-to-liquid applications. All prior period amounts presented in the tables below have been reclassified based on our current reportable segments.

The following table ~~represents information for our reportable segments and our corporate function:~~summarizes the components of inventory:

Three Months Ended September 30, 2019
E&C Cryogenics E&C FinFans D&S West D&S East Intersegment Eliminations Corporate Consolidated
Sales to external customers^{(1) (2)}
$ 48.9
$ 128.6
$ 114.9
$ 70.4
$ (5.0 ) $ —
$ 357.8
Depreciation and amortization expense 2.0
15.1
2.9
3.7
—
0.4
24.1
Operating income (loss) ^{(1) - (4)}
3.6
16.2
24.9
7.1
(0.9 ) (21.0 ) 29.9
Capital expenditures 0.9
1.0
2.4
3.8
—
3.5
11.6



	March 31, 2020		December 31, 2019
Raw materials and supplies	$	111.6	$	104.0
Work in process	56.9		47.5
Finished goods	66.9		67.9
Total inventories, net	$	235.4	$	219.4

The allowance for excess and obsolete inventory balance at March 31, 2020 and December 31, 2019 was $10.2 and $10.8, respectively.

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

Three Months Ended September 30, 2018
E&C Cryogenics E&C FinFans D&S West D&S East Intersegment Eliminations Corporate Consolidated
Sales to external customers $ 35.6
$ 62.5
$ 119.0
$ 56.8
$ (1.7 ) $ —
$ 272.2
Depreciation and amortization expense 2.5
4.0
2.8
2.5
—
0.3
12.1
Operating income (loss) ^{(3) - (7)}
6.4
5.7
31.9
3.3
(0.5 ) (15.3 ) 31.5
Capital expenditures 2.9
0.9
1.3
2.5
—
0.8
8.4

Nine Months Ended September 30, 2019
E&C Cryogenics E&C FinFans D&S West D&S East Intersegment Eliminations Corporate Consolidated
Sales to external customers^{(1) (2)}
$ 131.3
$ 272.0
$ 344.8
$ 216.8
$ (8.2 ) $ —
$ 956.7
Depreciation and amortization expense 11.1
23.3
8.7
11.9
—
1.1
56.1
Operating income (loss) ^{(1) - (6)}
(7.1 ) 36.0
77.7
7.1
(2.5 ) (51.4 ) 59.8
Capital expenditures 4.0
1.9
6.2
9.7
—
4.9
26.7

Nine Months Ended September 30, 2018
E&C Cryogenics E&C FinFans D&S West D&S East Intersegment Eliminations Corporate Consolidated
Sales to external customers $ 98.6
$ 190.2
$ 337.2
$ 174.3
$ (6.1 ) $ —
$ 794.2
Depreciation and amortization expense 7.5
12.1
8.4
7.9
—
1.0
36.9
Operating income (loss) ^{(3) (4) (6) (7)}
2.9
17.9
77.7
13.5
(1.7 ) (44.5 ) 65.8
Capital expenditures 9.9
2.0
4.7
6.0
—
3.8
26.4

~~_______________~~


⁽¹⁾	~~Includes sales and operating loss for AXC, included in the E&C FinFans segment results since the acquisition date, July 1, 2019 as follows:~~


•	~~Sales were $60.1 for both the~~ ~~three and nine months ended September 30, 2019~~.


•	~~Operating income was $2.6 for both the~~ ~~three and nine months ended September 30, 2019~~.


⁽²⁾	Includes sales and operating income (loss) for VRV S.r.l and its subsidiaries (“VRV”), included in the E&C Cryogenics and D&S East segment results since the acquisition date, November 15, 2018 as follows:

~~Sales were $25.9 (E&C Cryogenics: $13.5, D&S East: $12.4) for the three months ended September 30, 2019.~~

~~Sales were $77.0 (E&C Cryogenics: $35.0, D&S East: $42.0) for the nine months ended September 30, 2019.~~

~~Operating income (loss) was $2.4 (E&C Cryogenics: $2.6, D&S East: $(0.2)) for the three months ended September 30, 2019.~~


•	~~Operating loss was $(6.8) (E&C Cryogenics: $(3.0), D&S East: $(3.8)) for the~~ ~~nine months ended September 30, 2019, which includes VRV inventory step-up of $1.7.~~


⁽³⁾	~~Restructuring costs for the:~~


•	~~Three Months Ended September 30, 2019 were~~ ~~$1.5 ($0.2 E&C Cryogenics, $0.6 E&C FinFans, $0.4 D&S West, $0.3 D&S East).~~


•	~~Three Months Ended September 30, 2018~~ ~~were $2.0 ($0.1 E&C FinFans, $0.1 D&S East, $1.8 Corporate).~~


•	~~Nine Months Ended September 30, 2019 were~~ ~~$13.3 ($2.4 E&C Cryogenics, $1.8 E&C FinFans, $0.8 D&S West, $8.1 D&S East, $0.2 Corporate).~~


•	~~Nine Months Ended September 30, 2018~~ ~~were $3.5 ($0.4 E&C Cryogenics, $0.1 E&C FinFans, $0.6 D&S East, $2.4 Corporate).~~

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~


⁽⁴⁾	~~Corporate includes transaction-related costs of: (transaction-related costs include costs associated with business development and other one-time transactions)~~


•	~~$4.3 and $2.0 for the three months ended September 30, 2019 and 2018, respectively, and~~


•	~~$7.0 and $4.1 for the nine months ended September 30, 2019 and 2018, respectively.~~


⁽⁵⁾	Includes $0.8 related to AXC integration activities during the third quarter of 2019 (E&C FinFans: $0.7, Corporate: $0.1), and $0.6 (D&S East: $0.2, Corporate: $0.4) and $1.8 (D&S East: $0.2, Corporate: $1.6) related to VRV integration activities for the three and nine months ended September 30, 2019, respectively.


⁽⁶⁾	~~Includes an expense of $3.8 recorded to cost of sales related to the estimated costs of the aluminum cryobiological tank recall for the nine months ended September 30, 2018.~~

⁽⁷⁾

Includes net severance costs of $0.9 related to headcount reductions associated with strategic realignment of our segment structure, which includes $1.8 in payroll severance costs partially offset by a $0.9 credit due to related share-based compensation forfeitures for the nine months ended September 30, 2018. Includes net severance costs of $1.4 related to the departure of our former CEO on June 11, 2018, which includes $3.2 in payroll severance costs partially offset by a $1.8 credit due to share-based compensation forfeitures for the nine months ended September 30, 2018.

~~Product Sales Information~~

Three Months Ended September 30, 2019
E&C Cryogenics E&C FinFans D&S West D&S East Intersegment Eliminations Consolidated
Natural gas processing (including petrochemical) applications $ 17.6
$ 88.6
$ —
$ 1.0
$ (1.5 ) $ 105.7
Liquefied natural gas (LNG) applications 17.3
11.0
16.1
10.2
(0.1 ) 54.5
Industrial gas applications 6.7
—
—
—
—
6.7
HVAC, power and refining applications 7.3
29.0
—
—
(0.6 ) 35.7
Bulk industrial gas applications —
—
40.7
48.2
(2.2 ) 86.7
Packaged gas industrial applications —
—
38.3
11.0
(0.6 ) 48.7
Cryobiological storage —
—
19.8
—
—
19.8
Total $ 48.9
$ 128.6
$ 114.9
$ 70.4
$ (5.0 ) $ 357.8

Three Months Ended September 30, 2018
E&C Cryogenics E&C FinFans D&S West D&S East Intersegment Eliminations Consolidated
Natural gas processing (including petrochemical) applications $ 17.2
$ 43.1
$ —
$ —
$ —
$ 60.3
Liquefied natural gas (LNG) applications 3.4
9.0
20.5
11.8
(0.4 ) 44.3
Industrial gas applications 3.3
3.3
—
—
—
6.6
HVAC, power and refining applications 11.7
7.1
—
—
—
18.8
Bulk industrial gas applications —
—
41.1
31.8
(0.4 ) 72.5
Packaged gas industrial applications —
—
37.2
13.2
(0.9 ) 49.5
Cryobiological storage —
—
20.2
—
—
20.2
Total $ 35.6
$ 62.5
$ 119.0
$ 56.8
$ (1.7 ) $ 272.2

~~Table of Contents~~

~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

Nine Months Ended September 30, 2019
E&C Cryogenics E&C FinFans D&S West D&S East Intersegment Eliminations Consolidated
Natural gas processing (including petrochemical) applications $ 64.1
$ 193.9
$ —
$ 1.0
$ (1.5 ) $ 257.5
Liquefied natural gas (LNG) applications 26.5
32.2
58.2
38.6
(0.1 ) 155.4
Industrial gas applications 17.3
—
—
—
—
17.3
HVAC, power and refining applications 23.4
45.9
—
—
(0.6 ) 68.7
Bulk industrial gas applications —
—
114.2
136.3
(3.0 ) 247.5
Packaged gas industrial applications —
—
109.8
40.9
(3.0 ) 147.7
Cryobiological storage —
—
62.6
—
—
62.6
Total $ 131.3
$ 272.0
$ 344.8
$ 216.8
$ (8.2 ) $ 956.7

Nine Months Ended September 30, 2018
E&C Cryogenics E&C FinFans D&S West D&S East Intersegment Eliminations Consolidated
Natural gas processing (including petrochemical) applications $ 53.1
$ 134.9
$ —
$ —
$ —
$ 188.0
Liquefied natural gas (LNG) applications 11.7
16.8
54.4
48.3
(2.0 ) 129.2
Industrial gas applications 13.0
—
—
—
—
13.0
HVAC, power and refining applications 20.8
38.5
—
—
—
59.3
Bulk industrial gas applications —
—
105.7
85.8
(1.2 ) 190.3
Packaged gas industrial applications —
—
117.8
40.2
(2.9 ) 155.1
Cryobiological storage —
—
59.3
—
—
59.3
Total $ 98.6
$ 190.2
$ 337.2
$ 174.3
$ (6.1 ) $ 794.2

Total Assets September 30,
2019 December 31,
2018
E&C Cryogenics $ 447.1
$ 455.0
E&C FinFans 1,045.6
434.2
D&S West 441.4
420.3
D&S East 497.2
496.1
Corporate 66.5
92.1
Total $ 2,497.8
$ 1,897.7

~~NOTE 4 — Revenue~~

~~Disaggregation of Revenue~~

~~The following table represents a disaggregation of revenue by timing of revenue along with the reportable segment for each category:~~

Three Months Ended September 30, 2019
E&C Cryogenics E&C FinFans D&S West D&S East Intersegment Eliminations Consolidated
Point in time $ 1.7
$ 20.7
$ 101.2
$ 64.1
$ (5.0 ) $ 182.7
Over time 47.2
107.9
13.7
6.3
—
175.1
Total $ 48.9
$ 128.6
$ 114.9
$ 70.4
$ (5.0 ) $ 357.8

~~Table of Contents~~

~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

Three Months Ended September 30, 2018
E&C Cryogenics E&C FinFans D&S West D&S East Intersegment Eliminations Consolidated
Point in time $ 2.3
$ 16.6
$ 102.8
$ 55.0
$ (1.3 ) $ 175.4
Over time 33.3
45.9
16.2
1.8
(0.4 ) 96.8
Total $ 35.6
$ 62.5
$ 119.0
$ 56.8
$ (1.7 ) $ 272.2

Nine Months Ended September 30, 2019
E&C Cryogenics E&C FinFans D&S West D&S East Intersegment Eliminations Consolidated
Point in time $ 10.8
$ 58.6
$ 310.5
$ 203.0
$ (8.2 ) $ 574.7
Over time 120.5
213.4
34.3
13.8
—
382.0
Total $ 131.3
$ 272.0
$ 344.8
$ 216.8
$ (8.2 ) $ 956.7

Nine Months Ended September 30, 2018
E&C Cryogenics E&C FinFans D&S West D&S East Intersegment Eliminations Consolidated
Point in time $ 10.6
$ 55.9
$ 299.3
$ 157.0
$ (4.4 ) $ 518.4
Over time 88.0
134.3
37.9
17.3
(1.7 ) 275.8
Total $ 98.6
$ 190.2
$ 337.2
$ 174.3
$ (6.1 ) $ 794.2

~~Refer to Note 3, “Reportable Segments,” for a table of revenue disaggregated by product application along with the reportable segment for each category.~~

~~Contract Balances~~

~~The following table represents changes in our contract assets and contract liabilities balances:~~

September 30,
2019
December 31, 2018 Year-to-date Change ($) Year-to-date Change (%)
Contract assets
Accounts receivable, net of allowances $ 224.5
$ 194.8
$ 29.7
15.2 %
Unbilled contract revenue 81.6
54.5
27.1
49.7 %

Contract liabilities
Customer advances and billings in excess of contract revenue $ 120.5
$ 130.0
$ (9.5 ) (7.3 )%
Long-term deferred revenue 1.0
1.4
(0.4 ) (28.6 )%

Revenue recognized for the three and nine months ended September 30, 2019 and 2018, that was included in the contract liabilities balance at the beginning of each year was $25.8, and $91.3 and $10.3 and $78.0, respectively. The amount of revenue recognized during the three and nine months ended September 30, 2019 from performance obligations satisfied or partially satisfied in previous periods as a result of changes in the estimates of variable consideration related to long-term contracts, was not significant.

~~Remaining Performance Obligations~~

Remaining performance obligations represent the transaction price of firm signed purchase orders or other written contractual commitments from customers for which work has not been performed, or is partially completed, and excludes unexercised contract options and potential orders. As of September 30, 2019, the estimated revenue expected to be recognized in the future related to remaining performance obligations was $755.6. We expect to recognize revenue on approximately 86% of the remaining performance obligations over the next 12 months and with the remaining over the next few years thereafter.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – ~~September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

~~NOTE 5 — Inventories~~

~~The following table summarizes the components of inventory:~~

September 30,
2019 December 31,
2018
Raw materials and supplies $ 108.7
$ 97.7
Work in process 50.6
53.0
Finished goods 75.6
82.4
Total inventories, net $ 234.9
$ 233.1

~~The allowance for excess and obsolete inventory balance at September 30, 2019 and December~~March 31, ~~2018 was $9.6 and $9.0, respectively.~~

~~NOTE 6 — Investments~~

~~The following table summarizes our Investments:~~

September 30, 2019 December 31, 2018
Investment in equity securities $ 9.6
$ —
Equity investments 6.3
2.8
Total investments $ 15.9
$ 2.8

~~Investment in equity securities~~

During the third quarter of 2019, we made an investment in Stabilis Energy, Inc. (“Stabilis”) by converting $7.0 of a note receivable from Stabilis into an investment in their company stock. As of September 30, 2019, the value of the investment was $9.6, which reflects a $2.6 unrealized gain upon conversion and mark-to-market for this investment in equity securities recorded in other income (expense), net on the condensed consolidated statement of income and comprehensive income during the three and nine months ended September 30, 2019.

We categorize our financial assets and liabilities that are recorded at fair value into a hierarchy based on whether the inputs to valuation techniques are observable to unobservable. Level 1 inputs represent quoted prices in active markets for identical assets and liabilities as of the measurement date. The Stabilis investment is measured at fair value in the condensed consolidated balance sheet as of September 30, 2019 using Level 1 inputs.

~~Equity method accounting investments~~

Our equity investments accounted for under the equity method of accounting include a 50% ownership interest in a joint venture with Hudson Products de Mexico S.A. de CV which totaled $3.0 at September 30, 2019 and December 31, 2018. This investment is operated and managed by our joint venture partner and as such, we do not have control over the joint venture and therefore is not consolidated. Our equity in earnings from this investment was $0.3 million for both the nine months ended September 30, 2019 and 2018. Earnings for the third quarter of 2019 and 2018 were not material. Additionally, we have a 25% ownership interest in Liberty LNG which we invested in during the third quarter of 2019 which totaled $3.3 at September 30, 2019.~~No earnings or losses have been recorded for this investment.~~

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~2020

(Dollars and shares in millions, except per share amounts) – Continued

NOTE 7 — Goodwill and Intangible Assets

Goodwill

As a result of our acquisition of AXC on July 1, 2019 (see Note 3, “Reportable Segments” and Note 10, “Business Combinations” for more information), we changed our reportable segments from 3 segments to 4 segments: (i) D&S East, (ii) D&S West, (iii) E&C Cryogenics, and (iv) E&C FinFans.

The following table represents the changes in goodwill by segment:

E&C E&C Cryogenics E&C FinFans D&S West D&S East Consolidated
Balance at December 31, 2018 $ 295.8
$ —
$ —
$ 151.3
$ 73.6
$ 520.7
Reallocation ⁽¹⁾
(295.8 ) 183.5
112.3
—
—
—
Foreign currency translation adjustments —
(1.9 ) (0.6 ) —
(4.3 ) (6.8 )
Goodwill from acquisitions —
—
240.1
—
—
240.1
Purchase price allocation adjustments ⁽²⁾
—
4.3
—
0.8
38.9
44.0
Balance at September 30, 2019 $ —
$ 185.9
$ 351.8
$ 152.1
$ 108.2
$ 798.0

Accumulated goodwill impairment loss at September 30, 2019 and December 31, 2018 ⁽¹⁾
$ —
$ 40.9
$ 23.7
$ 82.5
$ —
$ 147.1



	D&S East			D&S West		E&C Cryogenics			E&C FinFans			Consolidated
Balance at December 31, 2019	$	117.0		$	152.1	$	176.2		$	399.6		$	844.9
Foreign currency translation adjustments	(2.4		)	—		(1.0		)	(0.3		)	(3.7		)
Balance at March 31, 2020	$	114.6		$	152.1	$	175.2		$	399.3		$	841.2

Accumulated goodwill impairment loss at March 31, 2020 and December 31, 2019	$	—		$	82.5	$	40.9		$	23.7		$	147.1

~~_______________~~


⁽¹⁾	The former E&C segment goodwill and accumulated goodwill impairment loss at December 31, 2018 was reallocated to the 2 new segments (E&C Cryogenics and E&C FinFans) based on their relative fair values as of July 1, 2019.


⁽²⁾	~~For the nine months ended September 30, 2019, preliminary purchase price allocations for certain acquisitions were adjusted by $43.2 ($4.3 in E&C~~ ~~Cryogenics~~ ~~and $38.9 in D&S East) for the VRV acquisition and $0.8 for the Skaff acquisition. See Note 10, “Business Combinations”.~~

Intangible Assets

The following table displays the gross carrying amount and accumulated amortization for finite-lived intangible assets and indefinite-lived intangible assets (exclusive of goodwill) ⁽¹⁾:


		September 30, 2019					December 31, 2018						March 31, 2020					December 31, 2019
	Weighted-average Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization			Weighted-average Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Finite-lived intangible assets:
Customer relationships	13 years	$	418.6	$	(108.9	)	$	254.0	$	(92.0	)	13 years	$	379.1	$	(121.7	)	$	380.3	$	(115.0	)
Unpatented technology	11 years	91.9		(9.7		)	39.4		(5.1		)	10 years	89.0		(15.0		)	90.1		(13.0		)
Patents and other												2 years	20.9		(14.7		)	20.9		(9.8		)
Trademarks and trade names												14 years	2.7		(1.4		)	2.4		(1.2		)
Land use rights	50 years	11.8		(1.4		)	12.2		(1.3		)	50 years	11.8		(1.5		)	12.0		(1.5		)
Trademarks and trade names	14 years	6.2		(1.4		)	13.5		(1.1		)
Patents and other	4 years	23.1		(6.0		)	14.0		(1.5		)
Total finite-lived intangible assets	13 years	551.6		(127.4		)	333.1		(101.0		)	13 years	503.5		(154.3		)	505.7		(140.5		)
Indefinite-lived intangible assets:
Trademarks and trade names		153.6		—			98.3		—				163.2		—			163.9		—
Total intangible assets		$	705.2	$	(127.4	)	$	431.4	$	(101.0	)		$	666.7	$	(154.3	)	$	669.6	$	(140.5	)

_______________

Amortization expense for intangible assets subject to amortization was ~~$13.8~~$14.0 and ~~$5.0~~$7.2 for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $28.3 and $15.7 for the nine months ended September 30, 2019 and 2018,~~ respectively.

~~Table of Contents~~

~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

We estimate amortization expense to be recognized during the next five years as follows:


For the Year Ending December 31,
2019	$	16.1
2020	52.4		$	48.5
2021	37.9		35.5
2022	37.8		35.4
2023	37.4		35.1
2024			34.3

~~See Note 10, “Business Combinations” for further information related to intangible assets acquired during 2019 and 2018.~~

We received certain government grants related to land use rights for capacity expansion in China (“China Government Grants”). China Government Grants are generally recorded in other current liabilities and other long-term liabilities in ~~our~~the unaudited condensed consolidated balance sheets and generally recognized into income over the useful life of the associated assets (10 to 50 years).

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

China Government Grants are presented in our unaudited condensed consolidated balance sheets as follows:


	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Current	$	0.5	$	0.5	$	0.5	$	0.5
Long-term	7.2		7.7		7.0		7.2
Total China Government Grants	$	7.7	$	8.2	$	7.5	$	7.7

We also received government grants from certain local jurisdictions within the United States, which are recorded in other assets in the unaudited condensed consolidated balance sheets and were not significant for the periods presented.

~~Table of Contents~~

~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

NOTE 8 — Debt and Credit Arrangements

Summary of Outstanding Borrowings

The following table represents the components of our borrowings:


	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Senior secured revolving credit facilities and term loan:
Term loan due November 2024 ⁽¹⁾	$	450.0		$	—
Senior secured revolving credit facility due November 2024	149.8			—
Senior secured revolving credit facility due November 2022	—			329.3
Senior secured revolving credit facility and term loan:
Term loan due June 2024 ⁽¹⁾							$	444.4		$	447.2
Senior secured revolving credit facility due June 2024 ⁽²⁾							100.1			119.0
Unamortized debt issuance costs	(5.8		)	—			(5.2		)	(5.5		)
Senior secured revolving credit facilities and term loan, net of debt issuance costs	594.0			329.3
Senior secured revolving credit facility and term loan, net of debt issuance costs							539.3			560.7

Convertible notes due November 2024:
Principal amount	$	258.8		$	258.8		$	258.8		$	258.8
Unamortized discount	(44.7		)	(50.4		)	(40.8		)	(42.8		)
Unamortized debt issuance costs	(4.0		)	(4.5		)	(3.6		)	(3.8		)
Convertible notes due November 2024, net of unamortized discount and debt issuance costs	210.1			203.9			214.4			212.2

Foreign facilities	4.3			11.2			0.7			4.4

Total debt, net of unamortized discount and debt issuance costs	808.4			544.4			754.4			777.3
Less: current maturities	(15.9		)	(11.2		)	12.0			15.7
Less: current portion of unamortized debt issuance costs							0.9			0.6
Long-term debt	$	792.5		$	533.2		$	741.5		$	761.0

Senior Secured Revolving Credit ~~Facilities~~Facility and Term Loan

On June 14, 2019, we entered into the Fourth Amended and Restated Credit Agreement, which includes a senior secured revolving credit facility (the “SSRCF”) ~~with a borrowing capacity of $550.0~~ and a ~~$450.0~~ term loan (together, the ~~“2019~~“2024 Credit Facilities”). The ~~2019 Credit Facilities replace our previous $550.0 senior secured revolving credit facility, which was scheduled to mature on November 3, 2022. The 2019~~2024 Credit Facilities mature on June 14, 2024.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

Significant financial covenants for the ~~2019~~2024 Credit Facilities include financial maintenance covenants that, as of the last day of any fiscal quarter ending on and after June 30, 2019, (i) require the ratio of the amount of Chart and its subsidiaries’ consolidated total net indebtedness to consolidated EBITDA to be less than specified maximum ratio levels and (ii) require the ratio of the amount of Chart and its subsidiaries’ consolidated EBITDA to consolidated cash interest expense to be greater than a specified minimum ratio level. The ~~2019~~2024 Credit Facilities include a number of other customary covenants including, but not limited to, restrictions on our ability to incur additional indebtedness, create liens or other encumbrances, sell assets, enter into sale and lease-back transactions, make certain payments, investments, loans, advances or guarantees, make acquisitions and engage in mergers or consolidations and pay dividends or distributions. At ~~September 30, 2019,~~March 31, 2020, we were in compliance with all covenants.

The ~~2019~~2024 Credit Facilities also contain customary events of default. If such an event of default occurs, the lenders thereunder would be entitled to take various actions, including the acceleration of amounts due and all actions permitted to be taken by a secured creditor. The ~~2019~~2024 Credit Facilities are guaranteed by Chart and substantially all of its U.S. subsidiaries and secured by substantially all of the assets of Chart and our U.S. subsidiaries and 65% of the capital stock of our material non-U.S. subsidiaries (as defined by the Fourth Amended and Restated Credit Agreement) that are owned by U.S. subsidiaries.

~~Table~~Subsequent to the end of ~~Contents~~

~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes~~the first quarter of 2020, on April 20, 2020, we amended our 2024 Credit Facilities. The amendment, among other things, (i) adjusts the pricing grid in order to ~~Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars~~accommodate potentially higher leverage ratios, (ii) adjusts factoring related definitions and ~~shares~~other related provisions to provide Chart with greater flexibility to enter into such arrangements in ~~millions, except per share amounts) – Continued~~

~~As of September 30, 2019, there was $450.0 in borrowings outstanding~~the future, (iii) incorporates a “cash hoarding” prevention covenant and (iv) incorporates various amendments to reflect interest rate floor and other changes to the Loan Syndications and Trading Association and Loan Market Association market standards for credit agreements. The terms and conditions under the ~~term loan bearing an interest rate of 3.29%. The term loan was a delayed draw loan and was not drawn until July 1, 2019 and has a defined amortization schedule,~~2024 Credit Facilities are otherwise substantially the same as ~~defined by~~those prior to the credit agreement. Under the terms of the 2019 Credit Facility, 2.5% of the $450.0 term loan is payable annually in quarterly installments over the first two years, 5.0% is payable annually in quarterly installments over the third year, 7.5% is payable annually in quarterly installments over the fourth year and 10.0% is payable annually in quarterly installments over the fifth and final year. A ticking fee is required on the term loan, which ranges from 20 to 35 basis points of the unused balances which went into effect in July 2019 when drawn. For the three and nine months ended September 30, 2019, the ticking fee was $0.1.amendment.

We recorded $6.1 in deferred debt issuance costs in conjunction with the 2024 Credit Facilities, which is included in long-term debt in the unaudited condensed consolidated balance sheet at ~~September 30, 2019,~~March 31, 2020, associated with the term loan, which is being amortized over its five-year term beginning in July 2019.

The SSRCF includes a $100.0 sub-limit for letters of credit, a $250.0 sub-limit for discretionary letters of credit and a $50.0 sub-limit for swingline loans. We are required to pay a commitment fee on the SSRCF which ranges from 20 to 35 basis points of the respective unused balances. The letter of credit participation fee equals the daily aggregate letter of credit exposure at the rate per annum equal to the Applicable Margin for Eurocurrency Revolving Facility Borrowings (as defined, ranging from 1.25% to 2.25%, based on the calculated leverage ratio). A fronting fee must be paid on each letter of credit that is issued equal to 0.125% per annum of the stated dollar amount of the letter of credit.

We paid $7.5 in deferred debt issuance costs related to the ~~amended~~ SSCRF and included $2.5 of the unamortized debt issuance costs from the ~~prior~~previous senior secured revolving credit facility, which are presented in other assets in the unaudited condensed consolidated balance sheet at ~~September 30, 2019~~March 31, 2020 and are being amortized over the five-year term of the SSRCF. At ~~September 30, 2019,~~March 31, 2020, unamortized debt issuance costs associated with the SSRCF were ~~$9.5. In conjunction with the amendment of our credit facilities, we wrote off $0.2 in unamortized deferred debt issuance costs which related to the previous senior secured revolving credit facility.~~

As of September 30, 2019, there was $149.8 in borrowings outstanding under the SSRCF bearing a weighted-average interest rate of 1.99% and $61.2 in letters of credit and bank guarantees outstanding supported by the SSRCF. At September 30, 2019, the SSRCF had availability of $339.0.$8.5.

The following table summarizes interest expense and financing costs amortization related to the ~~2019~~2024 Credit Facilities and our previous senior secured revolving credit facility:

Three Months Ended
September 30,

Nine Months Ended
September 30,
2019 2018 2019 2018
Interest expense, term loan due November 2024 $ 4.6
$ —
$ 4.6
$ —
Interest expense, senior secured revolving credit facilities 1.0
2.9
6.8
8.0
Interest expense, senior secured revolving credit facilities and term loan $ 5.6
$ 2.9
$ 11.4
$ 8.0

Financing costs amortization, senior secured revolving credit facilities and term loan $ 0.8
$ 0.1
$ 1.2
$ 0.4



	Three Months Ended March 31,
	2020		2019
Interest expense, term loan due June 2024	$	4.2	$	—
Interest expense, senior secured revolving credit facility	0.6		3.2
Interest expense, senior secured revolving credit facility and term loan due June 2024	$	4.8	$	3.2

Financing costs amortization, senior secured revolving credit facility and term loan due 2024	$	0.8	$	0.2

2024 Convertible Notes

On November 6, 2017, we issued 1.00% Convertible Senior Subordinated Notes due November 2024 (the “2024 Notes”) in the aggregate principal amount of $258.8, pursuant to an Indenture, dated as of such date (the “Indenture”). The 2024 Notes bear

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

interest at an annual rate of 1.00%, payable on May 15 and November 15 of each year, beginning on May 15, 2018, and will mature on November 15, 2024 unless earlier converted or repurchased.

The 2024 Notes are senior subordinated unsecured obligations of the Company and are not guaranteed by any of our subsidiaries. The 2024 Notes are senior in right of payment to our future subordinated debt, equal in right of payment with the Company’s future senior subordinated debt and are subordinated in right of payment to our existing and future senior indebtedness, including indebtedness under our existing credit agreement.

~~Table of Contents~~

~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

A conversion of the 2024 Notes may be settled in cash, shares of our common stock or a combination of cash and shares of our common stock, at our election (subject to, and in accordance with, the settlement provisions of the Indenture). The initial conversion rate for the 2024 Notes is 17.0285 shares of common stock (subject to adjustment as provided for in the Indenture) per $1,000 principal amount of the 2024 Notes, which is equal to an initial conversion price of approximately $58.725 per share, representing a conversion premium of approximately 35% above the closing price of our common stock of $43.50 per share on October 31, 2017. In addition, following certain corporate events that occur prior to the maturity date as described in the Indenture, we will pay a make-whole premium by increasing the conversion rate for a holder who elects to convert its 2024 Notes in connection with such a corporate event in certain circumstances. For purposes of calculating earnings per share, if the average market price of our common stock exceeds the applicable conversion price during the periods reported, shares contingently issuable under the 2024 Notes will have a dilutive effect with respect to our common stock. Since the conversion price of $58.725 exceeded our closing common stock price of ~~$62.36~~$28.98 at the end of the period, ~~exceeded the conversion price of $58.725,~~ the if-converted value ~~exceeded~~did not exceed the principal amount of the 2024 ~~Notes by approximately $16.0~~ at ~~September 30, 2019.~~March 31, 2020. As described below, we entered into convertible note hedge transactions, which are expected to reduce the potential dilution with respect to our common stock upon conversion of the 2024 Notes.

Holders of the 2024 Notes may convert their 2024 Notes at their option at any time prior to the close of business on the business day immediately preceding August 15, 2024 only under the following circumstances: (1) during any fiscal quarter commencing after December 31, 2017 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price for the 2024 Notes on each applicable trading day; (2) during the five business day period after any 10 consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the Indenture) per one thousand U.S. dollar principal amount of Notes for each trading day of such measurement period was less than 97% of the product of the last reported sale price of our common stock and the applicable conversion rate for the 2024 Notes on each such trading day; or (3) upon the occurrence of specified corporate events described in the Indenture.

On or after August 15, 2024 until the close of business on the second scheduled trading day immediately preceding November 15, 2024, holders may convert their 2024 Notes at the option of the holder regardless of the foregoing circumstances. Upon conversion, we may settle the conversion by paying or delivering either shares of our common stock, solely cash, or a combination of cash and shares of our common stock, at our election. It is our intention to settle the principal amount of the 2024 Notes in cash and excess conversion value in shares of our common stock.

We reassess the convertibility of the 2024 Notes and the related balance sheet classification on a quarterly basis. As of ~~September 30, 2019,~~March 31, 2020, events for early conversion were not met, and thus the 2024 Notes were not convertible as of and for the fiscal quarter beginning ~~October~~April 1, ~~2019.~~2020. There have been no conversions as of the date of this filing.

We allocated the gross proceeds of the 2024 Notes between the liability and equity components of the 2024 Notes. The initial liability component of $200.1, which was recorded as long-term debt, represents the fair value of similar debt instruments that have no conversion rights. The initial equity component of $58.7, which was recorded as additional paid-in capital, represents the debt discount and was calculated as the difference between the fair value of the liability component and gross proceeds of the 2024 Notes. The liability component was recognized at the present value of its associated cash flows using a 4.8% straight-debt rate and is being accreted to interest expense over the term of the 2024 Notes.

We recorded $5.3 in deferred debt issuance costs associated with the 2024 Notes, which are being amortized over the term of the 2024 Notes using the effective interest method. We also recorded $1.5 in equity issuance costs, which was recorded as a reduction to additional paid-in capital.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – ~~September 30, 2019~~March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

The following table summarizes interest accretion of the 2024 Notes discount, 1.0% contractual interest coupon and financing costs amortization associated with the 2024 Notes:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2019		2018		2019		2018		2020		2019
2024 Notes, interest accretion of convertible notes discount	$	2.0	$	1.9	$	5.7	$	5.4	$	1.9	$	1.8
2024 Notes, 1.0% contractual interest coupon	0.6		0.6		1.9		1.9		0.6		0.6
2024 Notes, total interest expense	$	2.6	$	2.5	$	7.6	$	7.3	$	2.5	$	2.4

2024 Notes, financing costs amortization	$	0.2	$	0.2	$	0.5	$	0.5	$	0.2	$	0.2

Convertible Note Hedge and Warrant Transactions Associated with the 2024 Notes

In connection with the pricing of the 2024 Notes, we entered into convertible note hedge transactions (the “Note Hedge Transactions”) with certain parties, including the initial purchasers of the 2024 Notes (the “Option Counterparties”). The Note Hedge Transactions are expected generally to reduce the potential dilution upon any future conversion of the 2024 Notes. Payments for the Note Hedge Transactions totaled approximately $59.5 and were recorded as a reduction to additional paid-in capital in the December 31, 2017 consolidated balance sheet.

We also entered into separate, privately negotiated warrant transactions (the “Warrant Transactions”) with the Option Counterparties to acquire up to 4.41 shares of our common stock. Proceeds received from the issuance of the Warrant Transactions totaled approximately $46.0 and were recorded as an addition to additional paid-in capital in the December 31, 2017 consolidated balance sheet. The strike price of the Warrant Transactions will initially be $71.775 per share (subject to adjustment), which is approximately 65% above the last reported sale price of our common stock on October 31, 2017. The Warrant Transactions could have a dilutive effect to our stockholders to the extent that the market price per share of our common stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants.

The Note Hedge Transactions and Warrant Transactions effectively increased the conversion price of the 2024 Notes. The net cost of the Note Hedge Transactions and Warrant Transactions was approximately $13.5.

~~2018 Convertible Notes~~

On August 1, 2018, our 2.00% Convertible Senior Subordinated Notes due August 2018 (the “2018 Notes”) matured. The aggregate outstanding principal was $57.1 at August 1, 2018. During the nine months ended September 30, 2018, we settled upon maturity the 2018 Notes for total cash consideration of $57.1. Additionally, $0.6 of interest, which had previously been accrued, was paid at settlement.

~~The following table summarizes interest accretion of the 2018 Notes discount, 2.00% contractual interest coupon, and financing costs amortization associated with the 2018 Notes:~~

Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
2018 Notes, interest accretion of convertible notes discount $ 0.4
$ 1.9
2018 Notes, 2.0% contractual interest coupon 0.1
1.0
2018 Notes, total interest expense $ 0.5
$ 2.9

~~Convertible Note Hedge, Capped Call and Warrant Transactions Associated with the 2018 Notes~~

The convertible note hedge and capped call transactions associated with the 2018 Notes expired in August 2018, with immaterial exercises. Approximately 90% of the separate warrants associated with the 2018 Notes expired without exercise. Prior to the expiration date of February 26, 2019, a portion of the separate warrants were exercised. These exercises were not material.

In various markets where we do business, we have local credit facilities to meet local working capital demands, fund letters of credit and bank guarantees, and support other short-term cash requirements. The facilities generally have variable interest rates and are denominated in local currency but may, in some cases, facilitate borrowings in multiple currencies. As of ~~September 30,~~

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

~~2019,~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, we had USD equivalent ~~$4.3~~$0.7 and ~~$11.2~~$4.4 in borrowing outstanding under these facilitates, with additional capacity of USD equivalent ~~$21.1~~$20.8 and ~~$65.6,~~$23.1, respectively. The Company has foreign letters of credit and bank guarantees totaling USD equivalent ~~$12.5~~$34.9 and ~~$17.1~~$12.6 as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. The weighted-average interest rate on these borrowings was ~~2.4%~~1.4% and ~~4.8%~~1.3% as of ~~September 30, 2019,~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

Chart Energy & Chemicals, Inc., a wholly-owned subsidiary of the Company, had $1.0 in deposits in a bank outside of the SSRCF to secure letters of credit. The deposits are treated as restricted cash and restricted cash equivalents in the unaudited condensed consolidated balance sheets ($1.0 in other assets at both ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018)~~2019).

Fair Value Disclosures

The fair value of the 2024 Notes was approximately ~~124%~~78% and 132% of their par value as of ~~both September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019, respectively. The 2024 Notes are actively quoted instruments and, accordingly, the fair value of the 2024 Notes was determined using Level 1 inputs.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

NOTE 9 — Product Warranties

We provide product warranties with varying terms and durations for the majority of our products. We estimate our warranty reserve by considering historical and projected warranty claims, historical and projected cost-per-claim, and knowledge of specific product issues that are outside our typical experience. We record warranty expense in cost of sales in the unaudited condensed consolidated statements of income and comprehensive ~~income (loss).~~loss. Product warranty claims not expected to occur within one year are included as part of other long-term liabilities in the unaudited condensed consolidated balance sheets.

The following table represents changes in our consolidated warranty reserve:


Balance at December 31, 2018	$	8.9
Balance at December 31, 2019				$	11.7
Issued – warranty expense	6.3			1.3
Warranty usage	(3.8		)	(1.1		)
Balance at September 30, 2019	$	11.4
Balance at March 31, 2020				$	11.9

NOTE 10 — Business Combinations

Air-X-Changers Acquisition

On July 1, 2019, we completed the acquisition of AXC pursuant to the previously disclosed Asset Purchase Agreement dated as of May 8, 2019 (the “AXC acquisition”). The purchase price for AXC was $599.7, including post-closing purchase price adjustments with respect to working capital. We paid $592.0 of the purchase price at closing and the final working capital adjustment of $7.7 was paid during the third quarter of 2019. We financed the purchase price for the AXC acquisition with proceeds from borrowings under the ~~2019~~2024 Credit Facilities and ~~the 2019 Equity Offering.~~a public offering of Chart’s common stock in 2019. See Note 8, “Debt and Credit Arrangements” and Note 11 ~~“Equity and Accumulated~~“Accumulated Other Comprehensive Loss” for more information. We incurred $1.2 and $4.2 in transaction related costs during the second quarter of 2019 and the third quarter of 2019, respectively, related to the AXC acquisition which were recorded in selling, general and administrative expenses on the condensed consolidated statement of income.

AXC is a leading supplier of custom engineered and manufactured ACHX for the natural gas compression and processing industry and refining and petrochemical ~~industry in the United States.~~industry. The ACHX offered by AXC is used in conditioning natural gas during recovery, compression and transportation from underground reserves through major pipeline distribution channels. In addition to natural gas compression and processing, AXC’s products are also used in the turbine lube oil cooling, landfill gas compression and liquids cooling industries. AXC’s end markets include process industries, power generation and refineries. AXC was combined with Chart’s Hudson Products ~~business~~ and Chart Cooler ~~Services~~Service businesses from the prior E&C segment to create a new segment called E&C FinFans. The E&C FinFans segment is focused on our unique and broad product offering and capabilities in ACHX and fans.

WeAs defined in our significant policies for fair value measurements in Note 1, we preliminarily allocated the acquisition consideration to tangible and identifiable intangible assets acquired and liabilities assumed based on their preliminary estimated fair values as of the acquisition date. The preliminary fair value of the acquired tangible and identifiable intangible assets were determined based on inputs that are unobservable and significant to the overall

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

fair value measurement. It is also based on estimates and assumptions made by management at the time of the acquisition. As such, this was classified as Level 3 fair value hierarchy measurements and disclosures. ~~The excess of the purchase price over the estimated fair values is assigned to goodwill.~~

We estimated the preliminary fair value of acquired ~~developed~~unpatented technology and trademarks and trade names using the relief from royalty method. The preliminary fair values of acquired customer backlog and customer relationships were estimated using the multi-period excess earnings method. Under both the relief from royalty and multi-period excess earnings methods, the fair value models incorporated estimates of future cash flows, estimates of allocations of certain assets and cash flows, estimates of future growth rates, and management’s judgment regarding the applicable discount rates to use to discount such estimates of cash flows. The preliminary estimated useful lives of identifiable finite-lived intangible assets range from one to 1214 years.

~~During~~The excess of the ~~third quarter~~purchase price over the estimated fair values is assigned to goodwill. The preliminary estimated goodwill was established due to benefits including the combination of ~~2019, we prepared a preliminary fair value analyses of acquired assets~~strong engineering and ~~liabilities~~manufacturing cultures which will continue to further develop full service solutions for our worldwide customer base, as well as ~~certain other analyses.~~ the benefits derived from the anticipated synergies of AXC integrating with our E&C FinFans segment. Goodwill recorded for the AXC acquisition is expected to be deductible for tax purposes.

The acquisition consideration allocation below has been updated based on this valuation but remains preliminary. As additional information becomes available, we may further revise the preliminary acquisition consideration allocation during the remainder of the measurement period, which shall not exceed twelve months from the closing of the acquisition. Any such revisions or changes may be material. Those areas that are subject to change, include the following:

~~The following table summarizes the estimated fair values of the assets and liabilities assumed in the AXC acquisition:~~

September 30, 2019 Adjustments As Previously Disclosed June 30, 2019
Net assets acquired:
Identifiable intangible assets $ 304.4
$ (5.6 ) $ 310.0
Property, plant and equipment 33.3
(1.1 ) 34.4
Goodwill 240.1
0.8
239.3
Other assets 53.1
10.6
42.5
Liabilities (31.2 ) 3.0
(34.2 )
Net assets acquired $ 599.7
$ 7.7
$ 592.0

~~Information regarding identifiable intangible assets acquired in the AXC acquisition is presented below:~~

Weighted-average Estimated Useful Life September 30, 2019 Adjustments As Previously Disclosed June 30, 2019
Finite-lived intangible assets:
Customer relationships 12.0 years $ 180.7
$ 1.6
$ 179.1
Developed technology 10.0 years 46.7
(0.3 ) 47.0
Backlog 1.0 year 19.8
(7.5 ) 27.3
Non-compete agreements 4.0 years 1.4
0.3
1.1
Total finite-lived intangible assets acquired 11.0 years 248.6
(5.9 ) 254.5
Indefinite-lived intangible assets:
Trademarks 55.8
0.3
55.5
Total identifiable intangible assets acquired $ 304.4
$ (5.6 ) $ 310.0

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – ~~September 30, 2019~~March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

remainder of the measurement period, which shall not exceed twelve months from the closing of the acquisition. We do not believe such revisions or changes will be material.

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed in the AXC acquisition as of the acquisition date:



	Preliminary Estimated Fair Value
Net assets acquired:
Identifiable intangible assets	$	256.4
Goodwill	287.5
Property, plant and equipment	34.2
Other assets	53.1
Liabilities	(31.5		)
Net assets acquired	$	599.7

Information regarding preliminary identifiable intangible assets acquired in the AXC acquisition is presented below:



	Weighted-average Estimated Useful Life	Preliminary Estimated Asset Fair Value
Finite-lived intangible assets:
Customer relationships	14.0 years	$	139.1
Unpatented technology	10.0 years	42.1
Backlog ⁽¹⁾	1.0 year	19.2
Other identifiable intangible assets ⁽¹⁾	4.0 years	1.0
Total finite-lived intangible assets acquired	11.0 years	201.4
Indefinite-lived intangible assets:
Trademarks and trade names		55.0
Total identifiable intangible assets acquired		$	256.4

Unaudited Supplemental Pro Forma Information

The following unaudited supplemental pro forma financial information is based on our historical ~~condensed~~ consolidated financial statements and AXC’s historical ~~condensed~~ consolidated financial statements as adjusted to give effect to the July 1, 2019 AXC acquisition. The unaudited supplemental pro forma financial information for the periods presented gives effect to the acquisition as if it had occurred on January 1, ~~2018.~~2019.

The following adjustments are reflected in the pro forma financial table below:

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

This unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have resulted had the acquisition been in effect at the beginning of the periods presented. In addition, the unaudited pro forma results are not intended to be a projection of future results and do not reflect any operating efficiencies or cost savings that might be achievable.

The following table presents pro forma sales, net income attributable to Chart Industries, Inc., and net income attributable to Chart Industries, Inc. per common share data assuming AXC was acquired at the beginning of the ~~2018~~2019 fiscal year:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended
	2019		2018		2019		2018		March 31, 2019
Pro forma sales	$	357.8	$	324.3	$	1,105.5	$	939.1	$	365.5
Pro forma net income attributable to Chart Industries, Inc.	18.7		24.9		44.8		34.7		5.9

Pro forma net income attributable to Chart Industries, Inc. per common share, basic	$	0.52	$	0.71	$	1.35	$	0.99	$	0.17
Pro forma net income attributable to Chart Industries, Inc. per common share, diluted	0.51		0.67		1.28		0.96		0.16

On November 15, 2018, Chart completed the acquisition of VRV pursuant to the terms of the Amended and Restated Share Purchase Agreement (the “Amendment”) with the original parties as well as VRV that replaced in full the original Purchase Agreement. Immediately thereafter, we assigned all of our rights and obligations under the Amendment to VRV Holdings S.r.l. (“Holdings”), a newly formed Italian subsidiary of Chart. The Amendment provided a revised transaction structure pursuant to which Holdings acquired VRV Technoservice S.r.l. (“VRV Technoservice”), a newly formed Italian company wholly owned by VRV (the “Acquisition”). Prior to the Acquisition, as contemplated in the Amendment, VRV contributed substantially all of its business to VRV Technoservice. VRV Technoservice changed its name to VRV S.r.l. following the Acquisition.

The Acquisition purchase price was 191.1 million euros (equivalent to $216.1), net of cash assumed of 1.3 million euros (equivalent to $1.4), is inclusive of the base purchase price of 125.0 million euros (equivalent to $141.3) paid in cash, assumed indebtedness of VRV, which was paid off immediately at closing or shortly thereafter, of 63.7 million euros (equivalent to $72.0), and net working capital and other agreed-upon purchase price adjustments finalized during the first half of 2019 of 3.7 million euros (equivalent to $4.2) which was settled early in the second quarter of 2019. Additional indebtedness of VRV of 4.4 million euros (equivalent to $4.9) was assumed at the acquisition date and paid off during the first and second quarters of 2019. All U.S. dollar equivalent dollar amounts are based on the exchange rate as of the acquisition date. We funded the Acquisition, including the subsequent payoff of assumed indebtedness, with borrowings of 140.0 million euros (equivalent to $160.3) from our former

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

~~senior secured revolving credit facility and the remainder with cash on hand.~~

VRV, which has operations in Italy, France and India, is a diversified multinational corporation with highly automated, purpose-built facilities for the design and manufacture of pressure equipment serving the cryogenic and energy & petrochemical end markets. VRV’s results are included in our E&C Cryogenics and D&S East segments from the date of the Acquisition.

As defined in our significant accounting policy for business combinations in Note 2, of our Annual Report on Form 10-K for the year ended December 31, 2018, we preliminarily allocated the Acquisition consideration to tangible and identifiable intangible assets acquired and liabilities assumed based on their preliminary estimated fair values as of the Acquisition date. The preliminary fair value of the acquired tangible and identifiable intangible assets were determined based on inputs that are unobservable and significant to the overall fair value measurement. It is also based on estimates and assumptions made by management at the time of the Acquisition. As such, this was classified as Level 3 fair value hierarchy measurements and disclosures.

During the third quarter of 2019, we prepared a preliminary fair value analyses of acquired assets and liabilities as well as certain other analyses. The Acquisition consideration allocation below has been updated based on this valuation but remains preliminary. We expect to finalize the purchase price allocation and make the necessary adjustments during the fourth quarter of 2019. Any such revisions or changes may be material. Those areas that are subject to change, include the following:

The preliminary estimated useful lives of identifiable finite-lived intangible assets range from 2 to 12 years. The excess of the purchase price over the estimated fair values is assigned to goodwill. The preliminary estimated goodwill was established due to benefits including the combination of strong engineering and manufacturing cultures which will continue to further develop full service solutions for our worldwide customer base, as well as the benefits derived from the anticipated synergies of VRV integrating with Chart’s E&C Cryogenics and D&S East segments. Goodwill recorded for the VRV acquisition is not expected to be deductible for tax purposes.

~~The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed in the VRV acquisition as of the acquisition date:~~

September 30, 2019 Adjustments
As Previously Reported
December 31, 2018
Net assets acquired:
Identifiable intangible assets $ 41.2
$ (25.4 ) $ 66.6
Property, plant and equipment 67.5
(3.0 ) 70.5
Goodwill 106.4
43.2
63.2
Other net assets 7.3
(10.6 ) 17.9
Debt (4.9 ) —
(4.9 )
Net assets acquired $ 217.5
$ 4.2
$ 213.3

During the nine month period ending September 30, 2019, net assets acquired included adjustments to other net assets and goodwill based on U.S. GAAP purchase accounting primarily due to inventory valuation and balance sheet accounts related to revenue recognition. Net assets acquired, including goodwill, was also adjusted to reflect the net working capital and other agreed-upon purchase price adjustments of $4.2 negotiated during the nine month period ending September 30, 2019.

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

~~Information regarding preliminary identifiable intangible assets acquired in the VRV acquisition is presented below:~~

Weighted-average Estimated Useful Life September 30, 2019 Adjustments
As Previously Reported
December 31, 2018
Finite-lived intangible assets:
Customer relationships 12.0 years $ 14.5
$ (13.6 ) $ 28.1
Unpatented technology 12.0 years 22.2
6.3
15.9
Other identifiable intangible assets ⁽¹⁾
4.0 years 0.5
(11.3 ) 11.8
Trademarks and trade names 14.0 years 4.0
(6.8 ) 10.8
Total finite-lived intangible assets acquired 9.0 years $ 41.2
$ (25.4 ) $ 66.6

The following unaudited supplemental pro forma sales are based on our historical consolidated financial statements and VRV’s historical consolidated financial statements as adjusted to give effect to the November 15, 2018 acquisition of VRV. The unaudited supplemental pro forma sales information for the periods presented gives effect to the Acquisition as if it had occurred on January 1, 2018. The unaudited supplemental pro forma sales for the three and nine months ended September 30, 2018 for the Company including VRV would have been approximately $297.1 and $878.2. It is impracticable to disclose the pro forma net income and pro forma net income per share information because of significant differences between Chart accounting policies following U.S. GAAP and those followed by VRV.

The unaudited pro forma sales information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have resulted had the Acquisition been in effect at the beginning of the period presented. In addition, the unaudited pro forma sales results are not intended to be a projection of future results and do not reflect any operating efficiencies or cost savings that might be achievable.

~~Skaff Acquisition~~

On January 2, 2018, we acquired 100% of the equity interests of Skaff Cryogenics and Cryo-Lease, LLC (together “Skaff”) for an approximate purchase price of $12.5, net of cash acquired. Skaff provides quality repair service and re-manufacturing of cryogenic and liquefied natural gas storage tanks and trailers and also maintains a portfolio of cryogenic storage equipment that is leased to customers for temporary and permanent needs. Skaff is headquartered in Brentwood, New Hampshire and provides services and equipment to customers in North America. Skaff’s results are included in the D&S West operating segment. During the first quarter of 2019, the Skaff purchase price allocation was finalized, which resulted in an adjustment to the opening balance sheet increasing long-term deferred tax liabilities and goodwill each by $0.8.

~~Additional information related to the Skaff acquisition has not been presented because the impact on our consolidated results of operations and financial position is not material.~~

~~Contingent Consideration~~

The estimated fair value of contingent consideration related to the 2015 Thermax acquisition of our D&S West segment, was $1.8 at the date of acquisition and was valued according to a discounted cash flow approach, which included assumptions regarding the probability of achieving certain earnings targets and a discount rate applied to the potential payments. Potential payments were due to be paid before July 1, 2019 based on the attainment of certain earnings targets. The earnings targets for Thermax were below the minimum threshold so no contingent consideration was paid for the final year of the four year earn-out period.

NOTE 11 — ~~Equity and~~ Accumulated Other Comprehensive Loss

~~Public Stock Offering~~

~~On June 14, 2019, we completed a public offering (the “2019 Equity Offering”), through which Chart issued and sold 4.025 shares~~The components of common stock, $0.01 par value per share, which included the full exercise of the underwriters’ option to purchase additional shares, at a price of $73.50 per share, before underwriting discounts and commissions. We received proceeds of $295.8

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

~~from the issuance of shares and incurred $9.5 of equity issuance costs. A portion of the proceeds from the 2019 Equity Offering was used to retire existing debt.~~

~~Accumulated Other Comprehensive Loss~~

~~The following tables represent changes in~~ accumulated other comprehensive loss ~~by component:~~are as follows:

Foreign currency translation adjustments Pension liability adjustments, net of taxes Accumulated other comprehensive loss
Balance at June 30, 2018 $ (7.2 ) $ (9.9 ) $ (17.1 )
Other comprehensive loss (6.3 ) —
(6.3 )
Amounts reclassified from accumulated other comprehensive loss, net of income taxes —
0.2
0.2
Net current-period other comprehensive (loss) income, net of taxes (6.3 ) 0.2
(6.1 )
Balance at September 30, 2018 $ (13.5 ) $ (9.7 ) $ (23.2 )

Foreign currency translation adjustments Pension liability adjustments, net of taxes Accumulated other comprehensive (loss) income
Balance as of December 31, 2018 $ (17.5 ) $ (12.4 ) $ (29.9 )
Other comprehensive loss (20.3 ) —
(20.3 )
Amounts reclassified from accumulated other comprehensive loss, net of income taxes —
0.9
0.9
Net current-period other comprehensive (loss) income, net of taxes (20.3 ) 0.9
(19.4 )
Balance at September 30, 2019 $ (37.8 ) $ (11.5 ) $ (49.3 )


	Foreign currency translation adjustments			Pension liability adjustments, net of taxes			Accumulated other comprehensive (loss) income			Foreign currency translation adjustments			Pension liability adjustments, net of taxes			Accumulated other comprehensive loss
Balance as of December 31, 2017	$	2.2		$	(10.3	)	$	(8.1	)
Balance at December 31, 2018										$	(17.5	)	$	(12.4	)	$	(29.9	)
Other comprehensive loss	(15.7		)	—			(15.7		)	(4.9		)	—			(4.9		)
Amounts reclassified from accumulated other comprehensive loss, net of income taxes	—			0.6			0.6			—			0.3			0.3
Net current-period other comprehensive (loss) income, net of taxes	(15.7		)	0.6			(15.1		)	(4.9		)	0.3			(4.6		)
Balance at September 30, 2018	$	(13.5	)	$	(9.7	)	$	(23.2	)
Balance at March 31, 2019										$	(22.4	)	$	(12.1	)	$	(34.5	)

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – ~~September 30, 2019~~March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

NOTE 12 — Earnings Per Share

The following table presents calculations of net earnings per share of common stock:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2019		2018		2019		2018		2020		2019
Income from continuing operations	$	18.7	$	21.5	$	34.0	$	35.6
Income from discontinued operations, net of taxes	—		0.7		—		4.7
Net income attributable to Chart Industries, Inc.	$	18.7	$	22.2	$	34.0	$	40.3	$	8.5	$	0.9

Earnings per common share – basic:
Income from continuing operations	$	0.52	$	0.70	$	1.02	$	1.15
Income from discontinued operations	—		0.02		—		0.15
Net income attributable to Chart Industries, Inc.	$	0.52	$	0.72	$	1.02	$	1.30

Earnings per common share – diluted:
Income from continuing operations	$	0.51	$	0.65	$	0.97	$	1.11
Income from discontinued operations	—		0.02		—		0.14
Net income attributable to Chart Industries, Inc.	$	0.51	$	0.67	$	0.97	$	1.25
Net income attributable to Chart Industries, Inc. per common share:
Basic									$	0.24	$	0.03
Diluted									$	0.24	$	0.03

Weighted average number of common shares outstanding – basic	35.76		31.03		33.28		30.97		35.77		31.57
Incremental shares issuable upon assumed conversion and exercise of share-based awards	0.38		0.85		0.44		0.83		0.24		0.55
Incremental shares issuable due to dilutive effect of convertible notes	0.59		0.93		1.04		0.34		—		1.20
Incremental shares issuable due to dilutive effect of warrants	—		0.14		0.29		—		—		0.49
Weighted average number of common shares outstanding – diluted	36.73		32.95		35.05		32.14		36.01		33.81

Diluted earnings per share does not reflect the following potential common shares as the effect would be anti-dilutive:

Convertible note hedge ⁽¹⁾

Convertible note hedge and capped call transactions ⁽¹⁾

NOTE 13 — Income Taxes

Income tax expense ~~from continuing operations~~ of ~~$9.3 and $9.7 in~~$1.7 for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and income tax benefit of $2.0 for the three months ended March 31, 2019, ~~and 2018, respectively,~~ represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of ~~21.3%~~16.7% and 20.6%, respectively. Income tax expense from continuing operations of $6.4 and $4.2 for the three months ended September 30, 2019 and 2018, respectively, represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of 25.5% and 16.0%200.0%, respectively.

The effective income tax rate of ~~25.5% and 21.3%~~16.7% for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 differed from the U.S. federal statutory rate of 21% primarily due to excess tax benefits associated with stock compensation, ~~and~~partially offset by the effect of

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

income earned by certain of our foreign entities being taxed at higher rates than the U.S. federal statutory rate ~~partially offset by~~and losses incurred by certain of our Chinese operations for which no benefit was recorded. We expect our ~~2019~~2020 full year effective income tax rate to be approximately ~~21%~~20%.

The effective income tax rate from continuing operations of 16.0% and 20.6% for the three and nine months ended September 30, 2018, differed from the U.S. federal statutory rate of 21% primarily due to the effect of income earned by certain of the Company’s foreign entities being taxed at higher rates than the U.S. federal statutory rate as well as losses incurred by certain of our Chinese operations for which no benefit was recorded.

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, we had a liability for gross unrecognized tax benefits ~~from continuing operations~~ of ~~$2.1~~$2.5 and ~~$2.3,~~$2.4, respectively. This amount includes ~~$1.6 and $0.1~~$1.8 of unrecognized tax benefits ~~from continuing operations~~ as of ~~September 30, 2019~~both March 31, 2020 and December 31, ~~2018, respectively,~~2019, which, if ultimately recognized, would reduce our annual effective income tax rate. We recognize interest and penalties related to uncertain tax positions in income tax expense. These amounts were not significant for the periods presented.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

NOTE 14 — Share-based Compensation

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we granted ~~0.13~~0.11 stock options, ~~and 0.09~~0.08 restricted stock units, and ~~0.03~~0.04 performance units. The total fair value of awards granted to employees during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was ~~$12.3.~~$11.0. In addition, our non-employee directors received stock awards with a total fair value of ~~$0.5.~~$0.2. During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, participants in our stock option plans exercised options to purchase ~~0.29~~0.09 shares of our common stock, while 0.03 stock options were forfeited.

Stock options generally have a four-year graded vesting period. Restricted stock and restricted stock units generally vest ratably over a three-year period. Performance units generally vest at the end of a three-year performance period based on the attainment of certain pre-determined performance condition targets. During the ~~nine~~three months ended ~~September 30, 2019, 0.12~~March 31, 2020, 0.09 restricted stock and restricted stock units ~~and 0.02 performance units~~ vested while ~~0.02~~0.01 restricted stock units were forfeited.

Share-based compensation expense was ~~$2.1~~$2.9 and ~~$0.5~~$2.4 for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. Share-based compensation expense was $6.4 and $3.5 for the nine months ended September 30, 2019 and 2018, respectively. Share-based compensation expense for the three and nine months ended September 30, 2018 included a $0.9 credit due to forfeitures related to headcount reductions associated with the strategic realignment of our segment structure in 2018. Furthermore, share-based compensation expense for the nine months ended September 30, 2018 included a $1.8 credit due to forfeitures related to the departure of our former Chief Executive Officer (“CEO”) on June 11, 2018. Share-based compensation expense is included in selling, general, and administrative expenses in the unaudited condensed consolidated statements of income and comprehensive ~~income.~~loss. As of ~~September 30, 2019,~~March 31, 2020, total share-based compensation of ~~$12.1~~$15.9 is expected to be recognized over the weighted-average period of approximately ~~2.1~~2.4 years.

NOTE 15 — Commitments and Contingencies

~~Aluminum Cryobiological Tank Recall~~Environmental

~~In April 2018,~~We are subject to federal, state, local, and foreign environmental laws and regulations concerning, among other matters, waste water effluents, air emissions, and handling and disposal of hazardous materials, such as cleaning fluids. We are involved with environmental compliance, investigation, monitoring, and remediation activities at certain of our owned and formerly owned manufacturing facilities and at one owned facility that is leased to a third party, and, except for these continuing remediation efforts, believes we ~~received several customer inquiries~~are currently in substantial compliance with all known environmental regulations. At March 31, 2020 and December 31, 2019, we had undiscounted accrued environmental reserves of $0.4 and $0.6, respectively. We accrue for certain environmental remediation-related activities for which commitments or remediation plans have been developed and for which costs can be reasonably estimated. These estimates are determined based upon currently available facts and circumstances regarding each facility. Actual costs incurred may vary from these estimates due to the ~~performance~~inherent uncertainties involved. Future expenditures relating to these environmental remediation efforts are expected to be made over the next seven years as ongoing costs of certain aluminum cryobiological tanks (in the D&S West segment) manufactured at our New Prague, Minnesota facility. An investigation determined that certain aluminum tanks manufactured at the facility during a limited certain period should be repaired or replaced. As such, on April 23, 2018,remediation programs.

Although we ~~issued a recall notice~~believe we have adequately provided for the ~~impacted product lines. Our D&S West segment recorded an expense of $3.8 to~~ cost of ~~sales for~~all known environmental conditions, the ~~during~~applicable regulatory agencies could insist upon different and more costly remediation than those we believe are adequate or required by existing law or third parties may seek to impose environmental liabilities on us. We believe that any additional liability in excess of amounts accrued which may result from the ~~second quarter~~resolution of ~~2018 related to the estimated costs~~such matters will not have a material adverse effect on our financial position, liquidity, cash flows or results of ~~the recall. As of September 30, 2019, there was no remaining liability related to the tank recall.~~ operations.

Stainless Steel Cryobiological Tank Legal Proceedings

During the second quarter of 2018, Chart was named in lawsuits (including a class action lawsuit filed in the U.S. 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. We continue to evaluate the merits of such claims in light of the ~~limited~~ information available to date regarding use, maintenance and operation of the tank ~~which has been out of our custody for the past six years when it~~that was sold to the Pacific Fertility Center through an independent ~~distributor.~~distributor and which has been out of our control for six years prior to the alleged failure. Accordingly, an accrual related to any damages that may result from the lawsuits has not been recorded because a potential loss is not currently probable or estimable.

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – September 30, 2019~~

~~(Dollars and shares in millions, except per share amounts) – Continued~~

We have asserted various defenses against the claims in the lawsuits, including a defense that since manufacture, we were not in any way involved with the installation, ongoing maintenance or monitoring of the tank or related fertility center cryogenic systems at any time since the initial delivery of the tank.

Aluminum Cryobiological Tank Legal Proceeding

Chart has been named in a purported class action ~~lawsuits~~lawsuit filed in the Ontario Superior Court of Justice against the Company and other defendants with respect to the alleged failure of an aluminum cryobiological storage tank (model FNL XC 47/11-6 W/

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

11) at The Toronto Institute for Reproductive Medicine in Etobicoke, Ontario. We have confirmed that the tank in question was part of the aluminum cryobiological tank recall commenced on April 23, 2018. As of March 31, 2020, a settlement was reached by the parties in the lawsuit with no material effect on the Company’s financial position, results of operations or cash flows.

We ~~have asserted~~are occasionally subject to various ~~defenses against~~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. 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 will not have a material adverse effect on our financial position, liquidity, cash flows, or results of operations. Future developments may, however, result in ~~the lawsuits and are~~resolution of these legal claims in ~~the early stages of litigation. Accordingly, an accrual related to any damages~~a way that ~~may result from the lawsuit has not been recorded because~~could have a ~~potential loss is not currently probable or estimable.~~material adverse effect.

NOTE 16 — Restructuring Activities

During the first ~~nine months~~quarter of ~~2019,~~2020, we implemented certain cost reduction ~~or avoidance~~ actions ~~including~~across all segments and corporate to appropriately size our workforce with demand as well as eliminate redundant work. Costs were primarily related to headcount reductions. These actions resulted in total restructuring costs of $5.2, consisting of mainly employee severance costs. These restructuring activities were substantially completed by the end of the first quarter 2020. We are closely monitoring our end markets and order rates and will continue to take appropriate and timely actions as necessary.

Restructuring charges of $7.4 in the first quarter of 2019 were related to the timing of recognizing costs related to facility consolidations ~~in E&C Cryogenics, D&S West and E&C FinFans~~ and a streamlining of the commercial activities surrounding our Lifecycle business in E&C Cryogenics and E&C FinFans, geographic realignment of our manufacturing capacity ~~and a facility closure~~ in D&S East, as well as departmental restructuring, including headcount reductions in each of these segments. These actions resulted in total restructuring costs of $1.5 and $13.3 for the three and nine months ended September 30, 2019, respectively, consisting of employee severance costs, disposals of property, plant and equipment and other costs. Restructuring costs for the first nine months of 2019 reflect a $1.6 credit to E&C Cryogenics restructuring costs recorded in the second quarter of 2019 due to the successful negotiation of a lease termination for the Lifecycle facility. We expect these restructuring activities will be substantially completed by the end of the year.

During the first nine months of 2018, we implemented certain cost reduction or avoidance actions, primarily related to departmental restructuring, including headcount reductions resulting in associated severance costs. We also executed a strategic realignment of our segment structure, which resulted in severance charges during the third quarter of 2018.reductions.

The following table is a summary of the severance and other restructuring costs, which included employee-related costs, facility rent and exit costs, relocation, recruiting, travel and other, for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2019		2018		2019		2018		2020		2019
Severance:
Cost of sales	$	0.8	$	—	$	1.8	$	0.2	$	2.3	$	0.5
Selling, general, and administrative expenses	0.1		1.9		1.0		2.6		2.9		1.0
Total severance costs	0.9		1.9		2.8		2.8		5.2		1.5
Other restructuring:
Cost of sales	0.2		—		8.7		0.5		—		5.0
Selling, general, and administrative expenses	0.4		0.1		1.8		0.2		—		0.9
Total other restructuring costs	0.6		0.1		10.5		0.7		—		5.9

Total restructuring costs	$	1.5	$	2.0	$	13.3	$	3.5	$	5.2	$	7.4

The following tables summarize our restructuring activities for the three months ended March 31, 2020 and 2019:



	Three Months Ended March 31, 2020
	D&S East			D&S West			E&C Cryogenics			E&C FinFans			Corporate		Consolidated
Balance at December 31, 2019	$	0.4		$	0.1		$	0.2		$	—		$	0.2	$	0.9
Restructuring costs	1.0			0.8			0.4			2.4			0.6		5.2
Cash payments and other	(0.7		)	(0.1		)	(0.1		)	(2.4		)	—		(3.3		)
Balance at March 31, 2020	$	0.7		$	0.8		$	0.5		$	—		$	0.8	$	2.8

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – ~~September 30, 2019~~March 31, 2020

(Dollars and shares in millions, except per share amounts) – Continued

~~The following tables summarize our restructuring activities for the three and nine months ended September 30, 2019 and 2018:~~

Three Months Ended September 30, 2018
E&C Cryogenics E&C FinFans D&S West D&S East Corporate Consolidated
Balance at June 30, 2018 $ —
$ —
$ 0.2
$ 0.1
$ —
$ 0.3
Restructuring costs —
0.1
—
0.1
1.8
2.0
Cash payments and other —
(0.1 ) 0.6
(0.1 ) —
0.4
Acquired restructuring reserve —
—
(0.7 ) —
—
(0.7 )
Balance at September 30, 2018 $ —
$ —
$ 0.1
$ 0.1
$ 1.8
$ 2.0

Nine Months Ended September 30, 2019
E&C Cryogenics E&C FinFans D&S West D&S East Corporate Consolidated
Balance at December 31, 2018 $ —
$ —
$ —
$ 0.8
$ 0.1
$ 0.9
Restructuring costs 2.4
1.8
0.8
8.1
0.2
13.3
Property, plant and equipment impairment and disposals (1.6 ) —
—
(4.0 ) —
(5.6 )
Cash payments and other (0.5 ) (1.8 ) (0.7 ) (4.3 ) (0.3 ) (7.6 )
Balance at September 30, 2019 $ 0.3
$ —
$ 0.1
$ 0.6
$ —
$ 1.0

Nine Months Ended September 30, 2018
E&C Cryogenics E&C FinFans D&S West D&S East Corporate Consolidated
Balance at December 31, 2017 $ 0.1
$ 0.1
$ 1.2
$ 0.2
$ 1.1
$ 2.7
Restructuring costs 0.4
0.1
—
0.6
2.4
3.5
Cash payments and other (0.5 ) (0.2 ) (0.4 ) (0.7 ) (1.7 ) (3.5 )
Acquired restructuring reserve —
—
(0.7 ) —
—
(0.7 )
Balance at September 30, 2018 $ —
$ —
$ 0.1
$ 0.1
$ 1.8
$ 2.0



	Three Months Ended March 31, 2019
	D&S East			D&S West		E&C Cryogenics			E&C FinFans			Corporate			Consolidated
Balance at December 31, 2018	$	0.8		$	—	$	—		$	—		$	0.1		$	0.9
Restructuring costs	2.4			0.3		3.4			1.1			0.2			7.4
Property, plant and equipment impairment	(1.9		)	—		(3.2		)	—			—			(5.1		)
Cash payments and other	(0.5		)	—		0.5			(1.1		)	(0.2		)	(1.3		)
Balance at March 31, 2019	$	0.8		$	0.3	$	0.7		$	—		$	0.1		$	1.9

NOTE 17 — Subsequent Event

On April 20, 2020, we amended our 2024 Credit Facilities. The amendment, among other things, (i) adjusts the pricing grid in order to accommodate potentially higher leverage ratios, (ii) adjusts factoring related definitions and other related provisions to provide Chart with greater flexibility to enter into such arrangements in the future, (iii) incorporates a “cash hoarding” prevention covenant and (iv) incorporates various amendments to reflect interest rate floor and other changes to the Loan Syndications and Trading Association and Loan Market Association market standards for credit agreements. The terms and conditions under our 2024 Credit Facilities are otherwise substantially the same as those prior to the amendment. Refer to Note 8, “Debt and Credit Arrangements” for further information.

The following discussion of our results of operations and financial condition should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements. Actual results may differ materially from those discussed below. See “Forward-Looking Statements” at the end of this discussion and Item 1A. “Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with this discussion.

~~Chart Industries, Inc. and its consolidated subsidiaries (the “Company,” “Chart,” “we,” “us,” or “our”) is~~We are a leading ~~independent~~diversified global manufacturer of highly engineered equipment servicing multiple market applications in ~~Energy and Industrial Gas. Our unique product portfolio is used throughout the liquid gas supply chain in the production, storage, distribution and end-use of atmospheric, hydrocarbon,~~energy and industrial ~~gases. Chart has domestic operations located across the United States~~gas. Our equipment and ~~an international presence~~engineered systems are primarily used for low-temperature and cryogenic applications utilizing our expertise in ~~Asia, Australia, Europe~~cryogenic systems and ~~the Americas.~~

On July 1, 2019, we completed the acquisition of Harsco Corporation’s Air-X-Changers business (“AXC”) pursuant to the previously disclosed Asset Purchase Agreement dated as of May 8, 2019 (the “AXC acquisition”). AXC is a leading supplier of custom-engineered and manufactured air cooled heat exchangers (“ACHX”) for the natural gas compression and processing industry and refining and petrochemical industry in the United States. The ACHX offered by AXC is used in conditioning natural gas during recovery, compression and transportation from underground reserves through major pipeline distribution channels. In addition to natural gas compression and processing, AXC’s products are also used in the turbine lube oil cooling, landfill gas compression and liquids cooling industries. AXC’s end markets include process industries, power generation and refineries. The acquisition of AXC reinforces our strategic focus on core cryogenic engineering and products for the industrial gas and energy spaces. We expect the acquisition of AXC to result in significant annual cost synergies. During our first quarter of ownership, we have achieved over $12 million of cost synergies. Furthermore, we have identified another $9 million of target cost synergies,equipment which ~~will be achieved in addition to the $20 million originally anticipated to be achieved in the first year.~~

~~The purchase price for AXC was approximately $599.7 million, including post-closing purchase price adjustments with respect to working capital. We paid $592.0 million of the purchase price~~operate at closing and the final working capital adjustment of $7.7 million was paid during the third quarter of 2019. We incurred $4.2 million and $1.2 million in transaction related costs during the third quarter of 2019 and second quarter of 2019, respectively, related to the AXC acquisition which were recorded in selling, general and administrative expenses on the condensed consolidated statement of income. We funded the purchase price for the AXC acquisition with proceeds from the Chart common stock public offering (the “2019 Equity Offering”) and borrowings under the Fourth Amended and Restated Credit Agreement, which includes a senior secured revolving credit facility (the “SSRCF”) and a term loan (together, the “2019 Credit Facilities”) as further discussed in Liquidity and Capital Resources.

~~On November 15, 2018, we completed the acquisition of VRV S.r.l. and its subsidiaries (collectively “VRV”)~~low temperatures sometimes approaching absolute zero (0 Kelvin; -273° Centigrade; -459° Fahrenheit). Additionally, on December 20, 2018, we closed on the sale of all of the equity interests in our oxygen-related products business to NGK SPARK PLUG CO., LTD. (the “Divestiture”). As a result of the Divestiture, the asset group, which included our respiratory and on-site generation systems businesses, qualified for discontinued operations for the three and nine months ended September 30, 2018.

The financial information presented and discussion of results that follows is presented on a continuing operations basis.

~~Third Quarter 2019 Highlights~~COVID-19 Update

~~Third~~While the recent outbreak of the coronavirus (COVID-19) did not have a material adverse effect on our reported results for the first quarter ~~2019 orders~~ of ~~$286.2 million decreased sequentially 11.1% over~~2020, we are actively monitoring the impact of the COVID-19 outbreak on our results of operations for the second quarter of 2020 and beyond. The extent to which our operations will be impacted by the outbreak will largely depend on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the outbreak and actions by government authorities to contain the outbreak or treat its impact, among other things.

All Chart manufacturing locations globally have been deemed essential business by each local and federal government and therefore continue to operate under this status, although we lost a total of 40 production days in the first quarter across our locations, with 26 of those days in our Chinese facilities in late January and early February as we either waited for the approval of our essential status or there was a mandatory government shutdown as in China. As the safety of our team members is our top priority, we have instituted additional precautions while we continue to produce our products not just for critical care medical applications but also for energy infrastructure. During March 2020, we increased production on specific medical oxygen related products by over 65% in the United States and 50% in the Czech Republic. Known order activity for our medical oxygen products used in hospital applications increased 34% in the first quarter 2020 when compared to the first quarter of 2019 and increased ~~8.5%~~29% when compared to the third quarter of 2018 (decreased 9.3% organically). The sequential decrease in orders was primarily driven by the delay of orders within our Energy & Chemicals Cryogenics (“E&C Cryogenics”) and Energy & Chemicals FinFans (“E&C FinFans”) segments that were pushed to future periods. The year-over-year increase of 8.5% is primarily due to $23.3 million of VRV orders and $23.6 million of AXC orders in the third quarter of 2019. Ending backlog as of September 30, 2019 was a record $755.6 million compared to $501.5 million as of September 30, 2018.

Third quarter 2019 sales of $357.8 million increased 31.4% from the third quarter of 2018 (decreased 0.1% organically), driven by sales of $60.1 million and $25.9 million from AXC and VRV, respectively. Third quarter 2019 sales also increased 15.6% from the secondfourth quarter of 2019. The regional breakdown compared to the first quarter of 2019 is:

Additionally, orders for our cryobiological product line, which is used for storage and transport of vaccinations, cell therapy and biological inventory increased by 14% to ~~$60.1~~$20.8 million in ~~sales from AXC, which was acquired in July 2019.~~

~~Third quarter 2019 gross margin as a percent of sales of 28.3% decreased from 30.2% in~~ the ~~third~~first quarter of ~~2018 and increased from 26.7% in~~2020 when compared to the ~~second~~first quarter of 2019. ~~The decrease~~April 2020 month to date demand for critical care products has increased. Month to date through April 20, 2020, we received more medical oxygen kit orders in ~~gross profit margin for~~ the ~~third~~United States than in the entire first quarter of ~~2019 was primarily driven by fewer high margin short lead-time replacement equipment sales as compared~~2020, and total medical oxygen specific demand is already at 39% of the first quarter levels. We expect this COVID-19 related demand to return to “pre-COVID-19” levels later in 2020.

In terms of macro drivers, we continue to see long-term strength in medium and long-term fundamentals of our markets, in particular the ~~third~~transition to clean energy and the need for infrastructure associated with that. We received orders with 120 new customers in the first quarter of ~~2018 within our E&C Cryogenics segment~~2020. Eighty-four of these new customers were outside of North America which continues to demonstrate the continued long-term fundamental global clean energy transition.

On March 27, 2020, the Coronavirus Aid, Relief, and ~~unfavorable product mix within our Distribution and Storage Western Hemisphere (“D&S West”~~Economic Security Act (the “CARES Act”) ~~segment, partially offset by favorable product mix within our E&C FinFans segment. Excluding the impact of AXC, the sequential increase~~ was ~~mainly driven by second quarter 2019 restructuring costs relative to the closing of a facility in China in our Distribution and Storage Eastern Hemisphere (“D&S East”) segment that did not reoccur~~signed into law in the ~~third quarter~~United States. The CARES Act, among other things, includes modifications to net operating loss carryforwards provisions and the net interest expense deduction, and deferment of ~~2019.~~social security tax payments. We are currently evaluating the provisions of the CARES Act and how certain elections may impact our financial position, results of operations, and disclosures if elected.

~~Outlook~~First Quarter 2020 Highlights

~~Our~~Orders for medical oxygen critical care products increased by 34% over the first quarter 2019, ~~full~~and we increased associated production by over 50% to meet continued demand for liquid oxygen for COVID-19 patients. We booked a $29.5 million order for a propane dehydrogenation plant in February 2020.

Ending backlog as of March 31, 2020 was $732.5 million compared to $733.8 million as of March 31, 2019, while backlog only decreased by 3.9% from the record high of $762.3 million as of December 31, 2019. Backlog of $732.5 million is flat to first quarter of 2019, which included $135 million of Venture Global Calcasieu Pass big LNG orders. As of the end of the first quarter 2020, there was $93 million of Calcasieu Pass backlog remaining. Excluding Calcasieu Pass, backlog increased 6.8% current quarter over prior year ~~outlook reflects organic year-to-date order growth~~quarter. In our Distribution and Storage Western Hemisphere (“D&S West”) segment, first quarter 2020 backlog of $150.9 million is the highest in the history of the business; up 18.7% over the first quarter of 2019 and 2.6% over the fourth quarter 2019. Distribution and Storage Eastern Hemisphere (“D&S East”) segment backlog of $221.0 million is the highest for that segment since the first quarter of 2015, aside from fourth quarter of 2019, which included a significant portion of PetroChina LNG related backlog that subsequently was cancelled. Also worth noting is that we have not had any material cancellations in our ~~segments and the positive contributions~~backlog year to date in any segment.


⁽¹⁾	~~Non-cash investing activities of $7.0 related to the conversion of a note receivable into an investment~~Includes $19.3 in ~~equity securities during the nine months ended September 30, 2019 (See Note 6 “Investments”).~~shares repurchased through our share repurchase program.


⁽²⁾	~~Includes depreciation expense of $1.3 and amortization expense of $1.8 for the nine months ended September 30, 2018.~~


⁽³⁾	~~Includes capital expenditures of $0.8 for the nine months ended September 30, 2018.~~


⁽⁴⁾	Includes restricted cash and restricted cash equivalents of $1.0 in other assets ~~at September 30, 2019, September 30, 2018 and December 31, 2018, respectively.~~for each of the periods presented. For further information regarding restricted cash and restricted cash equivalents balances, refer to Note 8, “Debt and Credit Arrangements.”


	Common Stock				Additional Paid-in Capital							Accumulated Other Comprehensive Loss				Non-controlling Interests							Common Stock					Additional Paid-in Capital									Accumulated Other Comprehensive Loss				Non-controlling Interests
	Shares Outstanding		Amount					Retained Earnings							Total Equity				Shares Outstanding			Amount					Treasury Stock	Additional Paid-in Capital			Retained Earnings					Total Equity					Non-controlling Interests
Balance at December 31, 2018	31.36		$	0.3	Additional Paid-in Capital	$	460.2			$	453.9	Accumulated Other Comprehensive Loss		$	(29.9	Non-controlling Interests		)		$	4.5			$	889.0
Net income	—		—		—				0.9			—				0.1				1.0
Other comprehensive (loss) income	—		—		—				—			(4.6		)		0.1				(4.5		)
Share-based compensation expense	—		—		2.4				—			—				—				2.4
Common stock issued from share-based compensation plans	0.41		—		8.3				—			—				—				8.3
Common stock repurchases(1)	(0.04	)	—		(2.7		)		—			—				—				(2.7		)
Balance at March 31, 2019	31.73		0.3		468.2				454.8			(34.5		)		4.7				893.5
Net income	—		—		—				14.4			—				0.2				14.6
Other comprehensive income	—		—		—				—			1.6				—				1.6
Common stock issuance, net	4.03		0.1		286.2				—			—				—				286.3
Share-based compensation expense	—		—		1.9				—			—				—				1.9
Common stock issued from share-based compensation plans	0.04		—		0.9				—			—				—				0.9
Common stock repurchases	(0.02	)	—		—				—			—				—				—
Dividend distribution to noncontrolling interest	—		—		—				—			—				(0.4		)		(0.4		)
Other	—		—		—				—			—				0.3				0.3
Balance at June 30, 2019	35.78		0.4		757.2				469.2			(32.9		)		4.8				1,198.7
Balance at December 31, 2019																							35.80			$	0.4	$	762.8		$	—		$	500.3		Accumulated Other Comprehensive Loss	$	(35.9	)		$	4.8		$	1,232.4
Net income	—		—		—				18.7			—				—				18.7			—			—		—			—			8.5			—				—			8.5
Other comprehensive loss	—		—		—				—			(16.4		)		—				(16.4		)	—			—		—			—			—			(9.9		)		—			(9.9		)
Share-based compensation expense	—		—		2.1				—			—				—				2.1			—			—		2.9			—			—			—				—			2.9
Common stock issued from share-based compensation plans	0.02		—		0.2				—			—				—				0.2			0.16			—		2.0			—			—			—				—			2.0
Other	—		—		—				—			—				(0.2		)		(0.2		)
Balance at September 30, 2019	35.80		$	0.4	$	759.5			$	487.9		$	(49.3	)		$	4.6			$	1,203.1
Common stock repurchases(1)																							—			—		—			(19.3		)	—			—				—			(19.3		)
Common stock repurchases from share-based compensation plans																							(0.01	)		—		(1.7		)	—			—			—				—			(1.7		)
Balance at March 31, 2020																							35.95			$	0.4	$	766.0		$	(19.3	)	$	508.8		$	(45.8	)		$	4.8		$	1,214.9



	Common Stock				Additional Paid-in Capital					Accumulated Other Comprehensive (Loss) Income			Non-controlling Interests
	Shares Outstanding		Amount		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive (Loss) Income			Non-controlling Interests			Total Equity
Balance at December 31, 2017	30.81		$	0.3	$	445.7		$	364.3	$	(8.1	)	$	3.0		$	805.2
Net income	—		—		—			5.8		—			0.5			6.3
Cumulative effect of accounting change	—		—		—			2.3		—			—			2.3
Other comprehensive income	—		—		—			—		12.4			—			12.4
Share-based compensation expense	—		—		3.2			—		—			—			3.2
Common stock issued from share-based compensation plans	0.20		—		1.3			—		—			—			1.3
Common stock repurchases	(0.04	)	—		(2.2		)	—		—			—			(2.2		)
Other	—		—		—			—		—			0.1			0.1
Balance at March 31, 2018	30.97		0.3		448.0			372.4		4.3			3.6			828.6
Net income	—		—		—			12.3		—			0.8			13.1
Other comprehensive income	—		—		—			—		(21.4		)	—			(21.4		)
Share-based compensation expense	—		—		0.1			—		—			—			0.1
Common stock issued from share-based compensation plans	0.03		—		0.4			—		—			—			0.4
Common stock repurchases	—		—		(0.1		)	—		—			—			(0.1		)
Dividend distribution to noncontrolling interest	—		—		—			—		—			(0.4		)	(0.4		)
Other	—		—		—			—		—			(0.2		)	(0.2		)
Balance at June 30, 2018	31.00		0.3		448.4			384.7		(17.1		)	3.8			820.1
Net income	—		—		—			22.2		—			0.5			22.7
Other comprehensive income	—		—		—			—		(6.1		)	—			(6.1		)
Share-based compensation expense	—		—		0.8			—		—			—			0.8
Common stock issued from share-based compensation plans	0.21		—		3.7			—		—			—			3.7
Common stock repurchases	(0.01	)	—		(0.1		)	—		—			—			(0.1		)
Other	—		—		—			—		—			(0.1		)	(0.1		)
Balance at September 30, 2018	31.20		$	0.3	$	452.8		$	406.9	$	(23.2	)	$	4.2		$	841.0



	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Sales	$	43.0	$	120.6
Cost of sales	31.3		87.1
Selling, general and administrative expenses	6.8		21.4
Amortization expense	0.6		1.8
Operating income ⁽¹⁾	4.3		10.3
Other loss, net	0.4		0.6
Income before income taxes	3.9		9.7
Income tax expense	3.2		5.0
Income from discontinued operations, net of tax	$	0.7	$	4.7



	Three Months Ended September 30, 2019
	E&C Cryogenics		E&C FinFans		D&S West		D&S East		Intersegment Eliminations			Corporate			Consolidated
Sales to external customers^{(1) (2)}	$	48.9	$	128.6	$	114.9	$	70.4	$	(5.0	)	$	—		$	357.8
Depreciation and amortization expense	2.0		15.1		2.9		3.7		—			0.4			24.1
Operating income (loss) ^{(1) - (4)}	3.6		16.2		24.9		7.1		(0.9		)	(21.0		)	29.9
Capital expenditures	0.9		1.0		2.4		3.8		—			3.5			11.6



	Nine Months Ended September 30, 2019
	E&C Cryogenics			E&C FinFans		D&S West		D&S East		Intersegment Eliminations			Corporate			Consolidated
Sales to external customers^{(1) (2)}	$	131.3		$	272.0	$	344.8	$	216.8	$	(8.2	)	$	—		$	956.7
Depreciation and amortization expense	11.1			23.3		8.7		11.9		—			1.1			56.1
Operating income (loss) ^{(1) - (6)}	(7.1		)	36.0		77.7		7.1		(2.5		)	(51.4		)	59.8
Capital expenditures	4.0			1.9		6.2		9.7		—			4.9			26.7


⁽¹⁾	Amounts include the impact of foreign currency translation. Fully amortized or impaired amounts are written off.


⁽¹⁾	As of March 31, 2020, there were $444.4 in borrowings outstanding under the term loan bearing an interest rate of 3.05%. The term loan ~~was drawn on July 1, 2019~~is repayable annually in ~~conjunction with~~quarterly installments of 2.5% of the ~~acquisition~~loan amount over the first two years, 5.0% for the third year, 7.5% for the fourth year and 10.0% for the fifth and final year.



	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
2018 Notes, interest accretion of convertible notes discount	$	0.4	$	1.9
2018 Notes, 2.0% contractual interest coupon	0.1		1.0
2018 Notes, total interest expense	$	0.5	$	2.9



	September 30, 2019			Adjustments			As Previously Disclosed June 30, 2019
Net assets acquired:
Identifiable intangible assets	$	304.4		$	(5.6	)	$	310.0
Property, plant and equipment	33.3			(1.1		)	34.4
Goodwill	240.1			0.8			239.3
Other assets	53.1			10.6			42.5
Liabilities	(31.2		)	3.0			(34.2		)
Net assets acquired	$	599.7		$	7.7		$	592.0


⁽¹⁾	Backlog and other identifiable intangible assets are included in “Patents and other” in Note 7. “Goodwill and Intangible Assets.”



	September 30, 2019			Adjustments			As Previously Reported December 31, 2018
Net assets acquired:
Identifiable intangible assets	$	41.2		$	(25.4	)	$	66.6
Property, plant and equipment	67.5			(3.0		)	70.5
Goodwill	106.4			43.2			63.2
Other net assets	7.3			(10.6		)	17.9
Debt	(4.9		)	—			(4.9		)
Net assets acquired	$	217.5		$	4.2		$	213.3


⁽¹⁾	~~Other identifiable intangible assets is included in “Patents and other” in Note 7, “Goodwill and Intangible Assets”.~~


⁽¹⁾	The convertible note hedge offsets any dilution upon actual conversion of the 2024 Notes up to a common stock price of $71.775 per share. For further information, refer to Note 8, “Debt and Credit Arrangements.”


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations


	Three Months Ended									Current Quarter vs. Prior Year Quarter					Current Quarter vs. Prior Sequential Quarter					Three Months Ended									Current Quarter vs. Prior Year Quarter					Current Quarter vs. Prior Sequential Quarter
	September 30, 2019			September 30, 2018			June 30, 2019			Variance ($)			Variance (%)		Variance ($)			Variance (%)		March 31, 2020			March 31, 2019			December 31, 2019			Variance ($)			Variance (%)		Variance ($)			Variance (%)
Sales
D&S East																				$	70.0		$	68.7		$	76.6		$	1.3		1.9	%	$	(6.6	)	(8.6	)%
D&S West																				111.6			118.0			116.9			(6.4		)	(5.4	)%	(5.3		)	(4.5	)%
E&C Cryogenics	$	48.9		$	35.6		$	47.3		$	13.3		37.4	%	$	1.6		3.4	%	62.2			35.1			58.9			27.1			77.2	%	3.3			5.6	%
E&C FinFans	128.6			62.5			72.9			66.1			105.8	%	55.7			76.4	%	80.7			70.5			89.7			10.2			14.5	%	(9.0		)	(10.0	)%
D&S West	114.9			119.0			113.5			(4.1		)	(3.4	)%	1.4			1.2	%
D&S East	70.4			56.8			77.7			13.6			23.9	%	(7.3		)	(9.4	)%
Intersegment eliminations	(5.0		)	(1.7		)	(1.8		)	(3.3		)	194.1	%	(3.2		)	177.8	%	(3.4		)	(3.0		)	0.3			(0.4		)	13.3	%	(3.7		)	(1,233.3	)%
Consolidated	$	357.8		$	272.2		$	309.6		$	85.6		31.4	%	$	48.2		15.6	%	$	321.1		$	289.3		$	342.4		$	31.8		11.0	%	$	(21.3	)	(6.2	)%

Gross Profit
D&S East																				$	17.1		$	8.9		$	8.5		$	8.2		92.1	%	$	8.6		101.2	%
D&S West																				38.7			40.0			38.7			(1.3		)	(3.3	)%	—			—	%
E&C Cryogenics	$	7.9		$	12.1		$	10.3		$	(4.2	)	(34.7	)%	$	(2.4	)	(23.3	)%	16.1			0.1			15.2			16.0			16,000.0	%	0.9			5.9	%
E&C FinFans	39.8			14.8			20.3			25.0			168.9	%	19.5			96.1	%	19.5			19.2			23.1			0.3			1.6	%	(3.6		)	(15.6	)%
D&S West	38.1			44.7			41.7			(6.6		)	(14.8	)%	(3.6		)	(8.6	)%
D&S East	16.3			11.2			11.3			5.1			45.5	%	5.0			44.2	%
Intersegment eliminations	(0.9		)	(0.5		)	(0.8		)	(0.4		)	80.0	%	(0.1		)	12.5	%	—			(1.1		)	0.2			1.1			100.0	%	(0.2		)	(100.0	)%
Consolidated	$	101.2		$	82.3		$	82.8		$	18.9		23.0	%	$	18.4		22.2	%	$	91.4		$	67.1		$	85.7		$	24.3		36.2	%	$	5.7		6.7	%

Gross Profit Margin																				Gross Profit Margin
D&S East																				24.4		%	13.0		%	11.1		%
D&S West																				34.7		%	33.9		%	33.1		%
E&C Cryogenics																				25.9		%	0.3		%	25.8		%
E&C FinFans																				24.2		%	27.2		%	25.8		%
Consolidated																				28.5		%	23.2		%	25.0		%

SG&A Expenses
D&S East																				$	9.4		$	9.9		$	8.2		$	(0.5	)	(5.1	)%	$	1.2		14.6	%
D&S West																				11.0			13.3			10.7			(2.3		)	(17.3	)%	0.3			2.8	%
E&C Cryogenics																				6.5			9.0			6.1			(2.5		)	(27.8	)%	0.4			6.6	%
E&C FinFans																				7.3			6.8			9.0			0.5			7.4	%	(1.7		)	(18.9	)%
Corporate																				19.7			16.3			19.1			3.4			20.9	%	0.6			3.1	%
Consolidated																				$	53.9		$	55.3		$	53.1		$	(1.4	)	(2.5	)%	$	0.8		1.5	%

SG&A Expenses (% of Sales)																				SG&A Expenses (% of Sales)
D&S East																				13.4		%	14.4		%	10.7		%
D&S West																				9.9		%	11.3		%	9.2		%
E&C Cryogenics																				10.5		%	25.6		%	10.4		%
E&C FinFans																				9.0		%	9.6		%	10.0		%
Consolidated																				16.8		%	19.1		%	15.5		%


⁽³⁾	Includes transaction-related costs of ~~$4.3 million, $2.0~~$0.9 million and ~~$1.8~~$0.6 million for the three months ended ~~September 30,~~March 31, 2019, ~~September 30, 2018,~~ and ~~June 30,~~December 31, 2019, respectively.



	Nine Months Ended						Current Year-to-date vs. Prior Year-to-date Period
	September 30, 2019			September 30, 2018			Variance ($)			Variance (%)
Sales
E&C Cryogenics	$	131.3		$	98.6		$	32.7		33.2	%
E&C FinFans	272.0			190.2			81.8			43.0	%
D&S West	344.8			337.2			7.6			2.3	%
D&S East	216.8			174.3			42.5			24.4	%
Intersegment eliminations	(8.2		)	(6.1		)	(2.1		)	34.4	%
Consolidated	$	956.7		$	794.2		$	162.5		20.5	%
Gross Profit
E&C Cryogenics	$	18.3		$	22.0		$	(3.7	)	(16.8	)%
E&C FinFans	79.4			45.6			33.8			74.1	%
D&S West	119.2			119.0			0.2			0.2	%
D&S East	36.7			37.1			(0.4		)	(1.1	)%
Intersegment eliminations	(2.5		)	(1.7		)	(0.8		)	47.1	%
Consolidated	$	251.1		$	222.0		$	29.1		13.1	%


⁽²⁾	~~Includes an expense of $3.8 million recorded to cost of sales related to the estimated costs of the aluminum cryobiological tank recall for the nine months ended September 30, 2018.~~


⁽³⁾	~~Includes~~ ~~transaction-related costs~~ ~~of $7.0 million and $4.1 million for the nine months ended September 30, 2019 and September 30, 2018, respectively.~~


⁽⁴⁾	Includes $0.8 million related to AXC integration activities (E&C FinFans: $0.7 million, Corporate: $0.1 million), and $1.8 million (D&S East: $0.2 million, Corporate: $1.6 million) related to VRV integration activities for the nine months ended September 30, 2019.


⁽⁵⁾	Includes net severance costs of $1.4 million related to the departure of our former CEO on June 11, 2018, which includes $3.2 million in payroll severance costs partially offset by a $1.8 million credit due to related share-based compensation forfeitures for the nine months ended September 30, 2018.



	Three Months Ended
	September 30, 2019		September 30, 2018		June 30, 2019
Orders
E&C Cryogenics	$	35.1	$	23.5	$	49.6
E&C FinFans	63.0		61.4		77.8
D&S West	111.6		103.3		115.8
D&S East	76.5		75.6		78.8
Consolidated	$	286.2	$	263.8	$	322.0



	Three Months Ended
	March 31, 2020			March 31, 2019		December 31, 2019
Orders
D&S East	$	70.4		$	83.2	$	91.9
D&S West	117.9			114.1		138.4
E&C Cryogenics	51.2			194.6		54.4
E&C FinFans	69.1			69.3		58.8
Intersegment eliminations	(4.3		)	—		—
Consolidated	$	304.3		$	461.2	$	343.5


	As of						As of
	September 30, 2019		September 30, 2018		June 30, 2019		March 31, 2020			March 31, 2019		December 31, 2019
Backlog
D&S East							$	221.0		$	196.2	$	224.0
D&S West							150.9			127.1		147.1
E&C Cryogenics	$	288.3	$	94.9	$	301.9	273.2			298.2		285.3
E&C FinFans	136.4		131.1		117.4		94.7			112.3		105.9
D&S West	127.1		130.7		130.1
D&S East	203.8		144.8		203.4
Intersegment eliminations							(7.3		)	—		—
Consolidated	$	755.6	$	501.5	$	752.8	$	732.5		$	733.8	$	762.3


Item 3.	Quantitative and Qualitative Disclosures About Market Risk


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds