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 ~~June~~September 30, 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 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

As of ~~July 20,~~October 19, 2020, there were ~~35,994,911~~36,060,520 outstanding shares of the Company’s 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 June 30, 2020 and December 31, 2019~~			3

Condensed Consolidated Statements of Income and Comprehensive Income ~~for the Three and Six Months Ended June 30, 2020 and 2019~~			4

Condensed Consolidated Statements of Cash Flows ~~for the Six Months Ended~~ ~~June 30, 2020 and 2019~~			5

Condensed Consolidated Statements of Equity ~~for the Three and Six Months Ended~~ ~~June 30, 2020 and 2019~~			67

Notes to the Condensed Consolidated Financial Statements			79

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2833

Item 3. Quantitative and Qualitative Disclosures About Market Risk			4248

Item 4. Controls and Procedures			4349

Part II. Other Information

Item 1. Legal Proceedings			4450

Item 1A. Risk Factors			4450

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4450

Item 4. Mine Safety Disclosures			4450

Item 6. Exhibits			4551

Signatures			4652

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)

June 30,
2020 December 31,
2019
ASSETS
Current Assets
Cash and cash equivalents $ 122.5 $ 119.0
Accounts receivable, less allowances of $8.2 and $8.8, respectively 184.4 202.6
Inventories, net 248.6 219.4
Unbilled contract revenue 85.5 86.1
Prepaid expenses 14.3 17.8
Other current assets 29.0 28.7
Total Current Assets 684.3 673.6
Property, plant, and equipment, net 397.5 404.6
Goodwill 844.2 844.9
Identifiable intangible assets, net 500.5 529.1
Investments 9.3 13.4
Other assets 16.8 15.8
TOTAL ASSETS $ 2,452.6 $ 2,481.4
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 110.6 $ 125.0
Customer advances and billings in excess of contract revenue 133.6 127.8
Accrued salaries, wages, and benefits 33.5 41.5
Accrued income taxes 16.8 11.8
Current portion of warranty reserve 10.4 10.4
Short-term debt and current portion of long-term debt 12.5 16.3
Operating lease liabilities, current 5.1 6.3
Other current liabilities 37.1 39.2
Total Current Liabilities 359.6 378.3
Long-term debt 736.0 761.0
Long-term deferred tax liabilities 53.5 52.1
Accrued pension liabilities 9.4 10.2
Operating lease liabilities, non-current 25.4 27.8
Other long-term liabilities 22.3 19.6
Total Liabilities 1,206.2 1,249.0
Equity
Common stock, par value $0.01 per share – 150,000,000 shares authorized, 35,987,455 and 35,799,994 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively 0.4 0.4
Additional paid-in capital 768.6 762.8
Treasury stock; 760,782 shares at June 30, 2020 (19.3) —
Retained earnings 528.9 500.3
Accumulated other comprehensive loss (37.9) (35.9)
Total Chart Industries, Inc. Shareholders’ Equity 1,240.7 1,227.6
Noncontrolling interests 5.7 4.8
Total Equity 1,246.4 1,232.4
TOTAL LIABILITIES AND EQUITY $ 2,452.6 $ 2,481.4


	September 30, 2020		December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	120.7	$	119.0
Accounts receivable, less allowances of $8.5 and $8.6, respectively	163.6		191.6
Inventories, net	237.6		210.0
Unbilled contract revenue	97.1		86.1
Prepaid expenses	15.3		17.5
Other current assets	24.8		27.8
Current assets of discontinued operations	69.4		21.6
Total Current Assets	728.5		673.6
Property, plant, and equipment, net	396.0		397.8
Goodwill	817.6		811.4
Identifiable intangible assets, net	488.7		522.4
Investments	9.7		13.4
Other assets	12.4		15.8
Non-current assets of discontinued operations	0		47.0
TOTAL ASSETS	$	2,452.9	$	2,481.4

LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	107.7	$	120.8
Customer advances and billings in excess of contract revenue	124.7		127.7
Accrued salaries, wages, and benefits	32.3		40.0
Accrued income taxes	14.5		11.8
Current portion of warranty reserve	10.7		10.2
Short-term debt and current portion of long-term debt	11.3		16.3
Operating lease liabilities, current	5.3		6.3
Other current liabilities	40.5		39.3
Current liabilities of discontinued operations	5.9		5.9
Total Current Liabilities	352.9		378.3
Long-term debt	695.4		761.0
Long-term deferred tax liabilities	56.1		52.1
Accrued pension liabilities	8.1		10.2
Operating lease liabilities, non-current	25.6		27.8
Other long-term liabilities	22.7		19.4
Non-current liabilities of discontinued operations	0		0.2
Total Liabilities	1,160.8		1,249.0

Equity
Common stock, par value $0.01 per share – 150,000,000 shares authorized, 36,047,415 and 35,799,994 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively	0.4		0.4
Additional paid-in capital	772.4		762.8
Treasury stock; 760,782 shares at September 30, 2020	(19.3)		0
Retained earnings	550.6		500.3
Accumulated other comprehensive loss	(17.9)		(35.9)
Total Chart Industries, Inc. Shareholders’ Equity	1,286.2		1,227.6
Noncontrolling interests	5.9		4.8
Total Equity	1,292.1		1,232.4
TOTAL LIABILITIES AND EQUITY	$	2,452.9	$	2,481.4

See accompanying notes to these unaudited condensed consolidated financial statements.

Table of Contents

CHART INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

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


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2020		2019		2020		2019
Sales	Sales	$	310.4	$	309.6	$	631.5	$	598.9	Sales	$	273.2	$	338.0	$	864.7	$	894.1
Cost of sales	Cost of sales	218.0		226.8		447.7		449.0		Cost of sales	194.6		245.1		620.5		671.9
Gross profit	Gross profit	92.4		82.8		183.8		149.9		Gross profit	78.6		92.9		244.2		222.2
Selling, general, and administrative expenses	Selling, general, and administrative expenses	45.0		50.2		98.9		105.5		Selling, general, and administrative expenses	41.1		55.7		137.2		157.4
Amortization expense	Amortization expense	14.0		7.3		28.0		14.5		Amortization expense	9.4		13.7		37.3		28.2

Operating expenses	Operating expenses	59.0		57.5		126.9		120.0		Operating expenses	50.5		69.4		174.5		185.6
Operating income	Operating income	33.4		25.3		56.9		29.9		Operating income	28.1		23.5		69.7		36.6
Interest expense, net	Interest expense, net	7.5		5.4		14.7		10.7		Interest expense, net	6.5		7.8		21.2		18.5
Unrealized (gain) loss on investment in equity securities	Unrealized (gain) loss on investment in equity securities	(1.0)		—		3.8		—		Unrealized (gain) loss on investment in equity securities	(0.7)		(2.6)		3.2		(2.6)
Financing costs amortization	Financing costs amortization	1.1		0.6		2.1		1.0		Financing costs amortization	1.1		1.0		3.2		2.0
Foreign currency loss (gain)		0.9		(0.2)		1.2		(0.3)
Income before income taxes		24.9		19.5		35.1		18.5
Foreign currency (gain) loss										Foreign currency (gain) loss	(0.8)		(1.7)		0.8		(1.9)
Income from continuing operations before income taxes										Income from continuing operations before income taxes	22.0		19.0		41.3		20.6
Income tax expense	Income tax expense	3.9		4.9		5.6		2.9		Income tax expense	6.2		5.2		8.9		5.3
Net income from continuing operations										Net income from continuing operations	15.8		13.8		32.4		15.3
Income from discontinued operations, net of tax										Income from discontinued operations, net of tax	6.1		5.0		18.9		19.0
Net income	Net income	21.0		14.6		29.5		15.6		Net income	21.9		18.8		51.3		34.3
Less: Income attributable to noncontrolling, net of taxes		0.9		0.2		0.9		0.3
Less: Income attributable to noncontrolling interests of continuing operations, net of taxes										Less: Income attributable to noncontrolling interests of continuing operations, net of taxes	0.2		0		1.0		0.3
Net income attributable to Chart Industries, Inc.										Net income attributable to Chart Industries, Inc.	$	21.7	$	18.8	$	50.3	$	34.0
Net income attributable to Chart Industries, Inc.										Net income attributable to Chart Industries, Inc.
Income from continuing operations										Income from continuing operations	$	15.6	$	13.8	$	31.4	$	15.0
Income from discontinued operations, net of tax										Income from discontinued operations, net of tax	6.1		5.0		18.9		19.0
Net income attributable to Chart Industries, Inc.	Net income attributable to Chart Industries, Inc.	$	20.1	$	14.4	$	28.6	$	15.3	Net income attributable to Chart Industries, Inc.	$	21.7	$	18.8	$	50.3	$	34.0

Net income attributable to Chart Industries, Inc. per common share:
Basic		$	0.57	$	0.44	$	0.81	$	0.48
Diluted		0.57		0.41		0.80		0.45
Basic earnings per common share attributable to Chart Industries, Inc.:										Basic earnings per common share attributable to Chart Industries, Inc.:
Income from continuing operations										Income from continuing operations	$	0.44	$	0.39	$	0.89	$	0.45
Income from discontinued operations										Income from discontinued operations	0.18		0.14		0.53		0.57
Net income attributable to Chart Industries, Inc.										Net income attributable to Chart Industries, Inc.	$	0.62	$	0.53	$	1.42	$	1.02
Diluted earnings per common share attributable to Chart Industries, Inc.										Diluted earnings per common share attributable to Chart Industries, Inc.
Income from continuing operations										Income from continuing operations	$	0.43	$	0.38	$	0.88	$	0.43
Income from discontinued operations										Income from discontinued operations	0.17		0.13		0.53		0.54
Net income attributable to Chart Industries, Inc.										Net income attributable to Chart Industries, Inc.	$	0.60	$	0.51	$	1.41	$	0.97
Weighted-average number of common shares outstanding:	Weighted-average number of common shares outstanding:									Weighted-average number of common shares outstanding:
Basic	Basic	35.18		32.47		35.48		32.02		Basic	35.23		35.76		35.40		33.28
Diluted	Diluted	35.31		34.72		35.66		34.25		Diluted	35.94		36.73		35.61		35.05

Comprehensive income, net of taxes	Comprehensive income, net of taxes	$	28.9	$	16.2	$	27.5	$	12.6	Comprehensive income, net of taxes	$	41.9	$	2.3	$	69.4	$	14.8
Less: Comprehensive income attributable to noncontrolling interests, net of taxes	Less: Comprehensive income attributable to noncontrolling interests, net of taxes	0.9		0.2		0.9		0.3		Less: Comprehensive income attributable to noncontrolling interests, net of taxes	0.2		0		1.1		0.3
Comprehensive income attributable to Chart Industries, Inc., net of taxes	Comprehensive income attributable to Chart Industries, Inc., net of taxes	$	28.0	$	16.0	$	26.6	$	12.3	Comprehensive income attributable to Chart Industries, Inc., net of taxes	$	41.7	$	2.3	$	68.3	$	14.5

See accompanying notes to these unaudited condensed consolidated financial statements.

Table of Contents

CHART INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in millions)


		Six Months Ended June 30,							Nine Months Ended September 30,
		2020		2019			2020		2019
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income	Net income	$	29.5	$	15.6	Net income	$	51.3	$	34.3
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Less: Income from discontinued operations						Less: Income from discontinued operations	18.9		19.0
Income from continuing operations						Income from continuing operations	32.4		15.3
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	47.5		32.0		Depreciation and amortization	66.1		55.2
Interest accretion of convertible notes discount	Interest accretion of convertible notes discount	3.9		3.7		Interest accretion of convertible notes discount	5.9		5.7
Employee share-based compensation expense	Employee share-based compensation expense	4.9		4.3		Employee share-based compensation expense	6.8		6.2
Financing costs amortization	Financing costs amortization	2.1		1.0		Financing costs amortization	3.2		2.0

Unrealized loss on investment in equity securities		3.8		—
Unrealized foreign currency transaction (gain) loss						Unrealized foreign currency transaction (gain) loss	(3.1)		2.7
Unrealized loss (gain) on investment in equity securities						Unrealized loss (gain) on investment in equity securities	3.2		(2.6)
Other non-cash operating activities	Other non-cash operating activities	2.4		4.9		Other non-cash operating activities	(2.0)		1.9
Changes in assets and liabilities, net of acquisitions:	Changes in assets and liabilities, net of acquisitions:					Changes in assets and liabilities, net of acquisitions:
Accounts receivable	Accounts receivable	18.1		(11.1)		Accounts receivable	26.7		0.3
Inventories	Inventories	(29.2)		(3.6)		Inventories	(26.6)		(3.8)
Unbilled contract revenues and other assets	Unbilled contract revenues and other assets	13.3		(22.0)		Unbilled contract revenues and other assets	(0.2)		(11.6)
Accounts payable and other liabilities	Accounts payable and other liabilities	(21.8)		(20.7)		Accounts payable and other liabilities	(15.6)		(21.3)
Customer advances and billings in excess of contract revenue	Customer advances and billings in excess of contract revenue	5.8		(4.5)		Customer advances and billings in excess of contract revenue	(2.6)		(14.2)
Net Cash Provided By (Used In) Operating Activities		80.3		(0.4)
Net Cash Provided By Operating Activities						Net Cash Provided By Operating Activities	94.2		35.8
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(21.0)		(15.1)		Capital expenditures	(26.9)		(26.0)
Acquisition of businesses, net of cash acquired	Acquisition of businesses, net of cash acquired	—		(4.2)		Acquisition of businesses, net of cash acquired	0		(603.9)
Proceeds from sale of assets	Proceeds from sale of assets	0.8		—		Proceeds from sale of assets	7.9		0

Investments ⁽¹⁾						Investments ⁽¹⁾	0		(3.3)
Government grants	Government grants	—		(0.2)		Government grants	0		0.5
Net Cash Used In Investing Activities	Net Cash Used In Investing Activities	(20.2)		(19.5)		Net Cash Used In Investing Activities	(19.0)		(632.7)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Borrowings on revolving credit facilities	Borrowings on revolving credit facilities	93.5		52.0		Borrowings on revolving credit facilities	94.5		202.6
Repayments on revolving credit facilities	Repayments on revolving credit facilities	(121.4)		(291.3)		Repayments on revolving credit facilities	(167.1)		(384.2)

Borrowings on term loan						Borrowings on term loan	0		450.0
Repayments on term loan	Repayments on term loan	(5.6)		—		Repayments on term loan	(8.4)		0
Payments for debt issuance costs	Payments for debt issuance costs	(1.9)		(2.7)		Payments for debt issuance costs	(1.0)		(13.6)
Issuance of shares	Issuance of shares	—		295.8		Issuance of shares	0		295.8
Payments for equity issuance costs ⁽¹⁾		—		(8.9)
Payments for equity issuance costs						Payments for equity issuance costs	0		(9.5)
Proceeds from exercise of stock options	Proceeds from exercise of stock options	2.6		9.2		Proceeds from exercise of stock options	4.2		9.4
Common stock repurchases from share-based compensation plans	Common stock repurchases from share-based compensation plans	(1.7)		(2.8)		Common stock repurchases from share-based compensation plans	(1.7)		(2.8)
Common stock repurchases ⁽²⁾	Common stock repurchases ⁽²⁾	(19.3)		—		Common stock repurchases ⁽²⁾	(19.3)		0
Dividend distribution to noncontrolling interest		—		(0.4)

Other financing activities						Other financing activities	0		(0.5)
Net Cash (Used In) Provided By Financing Activities	Net Cash (Used In) Provided By Financing Activities	(53.8)		50.9		Net Cash (Used In) Provided By Financing Activities	(98.8)		547.2
Effect of exchange rate changes on cash and cash equivalents		(2.8)		(0.6)
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents		3.5		30.4
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period ⁽³⁾		120.0		119.1
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD ⁽³⁾		$	123.5	$	149.5

Table of Contents


DISCONTINUED OPERATIONS
Cash Provided by Operating Activities ⁽³⁾	18.3		19.5
Cash Used in Investing Activities ⁽⁴⁾	(0.4)		(0.7)

Cash Provided by Discontinued Operations	17.9		18.8
Effect of exchange rate changes on cash and cash equivalents	7.4		(6.5)
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	1.7		(37.4)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period ⁽⁵⁾	120.0		119.1
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD ⁽⁵⁾	$	121.7	$	81.7

⁽¹⁾Non-cash ~~financing~~investing activities ~~for debt issuance costs and~~of $7.0 related to the conversion of a note receivable into an investment in equity ~~issuance costs were $10.9 and $0.6, respectively, for~~securities during the ~~six~~nine months ended ~~June~~September 30, ~~2019.~~2019 (See Note 5, “Investments”).

⁽²⁾Includes $19.3 in shares repurchased through our share repurchase program.

⁽³⁾Includes depreciation expense of $0.8 for both the nine months ended September 30, 2020 and 2019.

⁽⁴⁾Includes capital expenditures of $0.4 and $0.7 for the nine months ended September 30, 2020 and 2019, respectively.

⁽⁵⁾Includes restricted cash and restricted cash equivalents of $1.0 in other assets for each of the periods presented. For further information regarding restricted cash and restricted cash equivalents balances, refer to Note 8,9, “Debt and Credit Arrangements.”

~~See accompanying notes to these unaudited condensed consolidated financial statements.~~

~~Table of Contents~~

~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)~~

~~(Dollars in millions)~~

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive
Loss Non-controlling Interests
Shares
Outstanding Amount Treasury Stock Retained
Earnings Total
Equity
Balance at December 31, 2019 35.80 $ 0.4 $ 762.8 $ — $ 500.3 $ (35.9) $ 4.8 $ 1,232.4
Net income — — — — 8.5 — — 8.5
Other comprehensive loss — — — — — (9.9) — (9.9)
Share-based compensation expense — — 2.9 — — — — 2.9
Common stock issued from share-based compensation plans 0.16 — 2.0 — — — — 2.0
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
Net income — — — — 20.1 — 0.9 21.0
Other comprehensive income — — — — — 7.9 — 7.9
Share-based compensation expense — — 2.0 — — — — 2.0
Common stock issued from share-based compensation plans 0.04 — 0.6 — — — — 0.6
Balance at June 30, 2020 35.99 $ 0.4 $ 768.6 $ (19.3) $ 528.9 $ (37.9) $ 5.7 $ 1,246.4

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

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Non-controlling Interests
Shares
Outstanding Amount Retained
Earnings 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
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 from share-based compensation plans (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

See accompanying notes to these unaudited condensed consolidated financial statements.

Table of Contents

ICHART INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(Dollars in millions)


	Common Stock					Additional Paid-in Capital								Accumulated Other Comprehensive Loss		Non-controlling Interests
	Shares Outstanding	Amount						Treasury Stock			Retained Earnings							Total Equity
Balance at December 31, 2019	35.80	$	0.4	$	762.8	$	0		$	500.3		$	(35.9)	$	4.8	$	1,232.4
Net income	—	—		—		—			8.5			—		—		8.5

Other comprehensive loss	—	—		—		—			—			(9.9)		—		(9.9)
Share-based compensation expense	—	—		2.9		—			—			—		—		2.9
Common stock issued from share-based compensation plans	0.16	—		2.0		—			—			—		—		2.0
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
Net income	—	—		—		—			20.1			—		0.9		21.0
Other comprehensive income	—	—		—		—			—			7.9		—		7.9
Share-based compensation expense	—	—		2.0		—			—			—		—		2.0
Common stock issued from share-based compensation plans	0.04	—		0.6		—			—			—		—		0.6
Balance at June 30, 2020	35.99	0.4		768.6		(19.3)			528.9			(37.9)		5.7		1,246.4
Net income	—	—		—		—			21.7			—		0.2		21.9
Other comprehensive income	—	—		—		—			—			20.0		—		20.0
Share-based compensation expense	—	—		2.2		—			—			—		—		2.2
Common stock issued from share-based compensation plans	0.06	—		1.6		—			—			—		—		1.6
Balance as of September 30, 2020	36.05	$	0.4	$	772.4	$	(19.3)		$	550.6		$	(17.9)	$	5.9	$	1,292.1

_______________

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

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	Common Stock					Additional Paid-in Capital					Accumulated Other Comprehensive Loss		Non-controlling Interests
	Shares Outstanding	Amount						Retained Earnings							Total Equity
Balance as of 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
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 from share-based compensation plans	(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
Net income	—	—		—		18.8			—		—		18.8
Other comprehensive loss	—	—		—		—			(16.5)		—		(16.5)
Share-based compensation expense	—	—		2.1		—			—		—		2.1
Common stock issued from share-based compensation plans	0.02	—		0.2		—			—		—		0.2
Other	—	—		—		—			—		(0.2)		(0.2)
Balance as of September 30, 2019	35.80	$	0.4	$	759.5	$	488.0		$	(49.4)	$	4.6	$	1,203.1

See accompanying notes to these unaudited condensed consolidated financial statements.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – ~~June~~September 30, 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, 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 ~~six~~nine months ended ~~June~~September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

Nature of Operations: We are a leading independent global manufacturer of highly engineered equipment servicing multiple applications in the Energy and Industrial Gas markets. Our unique product portfolio is used in every phase of the liquid gas supply chain, including upfront engineering, service and repair. Being at the forefront of the clean energy transition, Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas and CO2 Capture amongst other applications. We are committed to excellence in environmental, social and corporate governance (ESG) issues both for our company as well as our customers. With over 25 global locations from the United States to Asia, Australia, India, Europe and South America, we maintain accountability and transparency to our team members, suppliers, customers and communities.

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~~discontinued operations presented as further discussed in ~~our Annual Report on Form 10-K for the year ended December 31, 2019.~~Note 2, “Discontinued Operations.”

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 ~~half~~nine months of 2020. While our production has been considered “essential” in all locations we operate in, we have experienced, and may again 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. At this time, we have not elected to avail ourselves of the CARES Act. We continue to evaluate 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 first quarter of 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 ~~June~~September 30, 2020, we had approximately ~~$55.7~~$55.7 available for additional repurchases under the share repurchase program, although we have no current intentions to recommence repurchases under this program.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

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

Recently Issued Accounting Standards (Not Yet Adopted): In August 2020, the FASB issued ASU 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entities Own Equity (Subtopic 815-40). This ASU simplifies accounting for convertible instruments by eliminating two of the three models in ASC 470-20 that require separating embedded conversion features from convertible instruments. The guidance is effective for fiscal years beginning after December 15, 2021. Early adoption is permitted. We expect adoption of this standard to impact accounting for our convertible notes due November 2024. We are currently assessing the effect that this ASU will have on our financial position, results of operations, and disclosures.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU simplifies the accounting for modifying contracts (including those in hedging relationships) that refer to LIBOR and other interbank offered rates that are expected to be discontinued due to reference rate reform. This guidance is effective upon issuance and generally can be applied through December 31, 2022. We expect adoption of this standard to impact accounting for our senior secured revolving credit facility due June 2024. We are currently assessing the effect this ASU will have on our financial position, results of operations, and disclosures.

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 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. We adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact our financial position, results of operations 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. We early adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a significant impact on our 2020 interim disclosures and is 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. We adopted this guidance effective January 1, 2020. The adoption of this guidance did not impact our financial position, results of operations 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 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 is effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. We adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact on our financial position, results of operations or disclosures. We maintain an allowance for doubtful accounts to provide for the 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 supportable forecast economic conditions.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

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

NOTE 2 — Discontinued Operations

As previously announced on August 25, 2020, we signed a definitive agreement to divest our cryobiological products business within our Distribution & Storage Western Hemisphere (“D&S West”) segment to Cryoport, Inc. (“Buyer”). On October 1, 2020, we finalized the sale for net cash proceeds of $317.1, inclusive of the base purchase price of $320.0 less estimated closing date adjustments of $2.9 (the “Divestiture”). The strategic decision to divest of our cryobiological products business reflects our strategy and capital allocation approach to focus on our core capabilities and offerings.

Our cryobiological products business asset group, met the criteria to be held for sale. Furthermore, we determined that the assets held for sale qualify for discontinued operations. As such, the financial results of the cryobiological products business are reflected in our unaudited condensed consolidated statements of income and comprehensive income as discontinued operations for all periods presented. Furthermore, current and non-current assets and liabilities of discontinued operations are reflected in the unaudited condensed consolidated balance sheets for both periods presented.

Summarized Financial Information of Discontinued Operations

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
Sales	$	19.4	$	19.8	$	59.5	$	62.6
Cost of sales	9.5		11.4		31.4		33.6
Selling, general and administrative expenses	1.4		1.8		4.3		5.6

Operating income ⁽¹⁾	8.5		6.6		23.8		23.4
Other expenses (income), net	0.2		0.3		(0.1)		0.3
Income before income taxes from discontinued operations	8.3		6.3		23.9		23.1
Income tax expense ⁽²⁾	2.2		1.3		5.0		4.1
Income from discontinued operations, net of tax	$	6.1	$	5.0	$	18.9	$	19.0

________________

⁽¹⁾Includes depreciation expense of $0.2 and $0.3 for the three months ended September 30, 2020 and 2019, respectively. Includes depreciation expense of $0.8 for both the nine months ended September 30, 2020 and 2019.

⁽²⁾Income tax expense of $2.2 and $1.3 for the three months ended September 30, 2020 and 2019, respectively, represents taxes on both U.S. and foreign earnings at a combined effective tax rate of 26.5% and 20.6%, respectively. Income tax expense of $5.0 and $4.1 for the nine months ended September 30, 2020 and 2019, respectively, represents taxes on both U.S. and foreign earnings at a combined effective tax rate of 20.9% and 17.7%, respectively.

The effective income tax rate of 26.5% and 20.9% for the three and nine months ended September 30, 2020, respectively, differed from the U.S. federal statutory rate of 21% primarily due to excess tax benefits associated with foreign-derived intangible income, which is offset by the effect of income earned by our certain foreign entities being taxed at higher rates than the U.S. federal statutory rate.

The effective income tax rate of 20.6% and 17.7% for the three and nine months ended September 30, 2019, respectively, differed from the U.S. federal statutory rate of 21% primarily due to excess tax benefits associated with foreign-derived intangible income, which is offset by the effect of income earned by our certain foreign entities being taxed at higher rates than the U.S. federal statutory rate.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

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

The following table represents the assets and liabilities from discontinued operations:


	September 30, 2020		December 31, 2019
Accounts receivable, net	$	9.7	$	11.0
Inventories, net	11.8		9.4
Prepaid expenses	0.2		0.3
Other current assets	1.2		0.9
Property, plant, and equipment, net	6.3		6.8
Goodwill ⁽¹⁾	33.5		33.5
Identifiable intangible assets, net	6.7		6.7
Total assets of discontinued operations	$	69.4	$	68.6

Current assets of discontinued operations ⁽¹⁾	$	69.4	$	21.6
Non-current assets of discontinued operations	0		47.0
Total assets of discontinued operations	$	69.4	$	68.6

Accounts payable	$	2.9	$	4.2
Customer advances and billings in excess of contract revenue	0.3		0.1
Accrued salaries, wages, and benefits	1.2		1.5
Current portion of warranty reserve	0.2		0.1
Other current liabilities	0.1		0
Other long-term liabilities	1.2		0.2
Total liabilities of discontinued operations	$	5.9	$	6.1

Current liabilities of discontinued operations ⁽²⁾	$	5.9	$	5.9
Non-current liabilities of discontinued operations	0		0.2
Total liabilities of discontinued operations	$	5.9	$	6.1

_______________

⁽¹⁾We allocated a portion of the D&S West reporting unit’s goodwill to the cryobiological products business asset group on a relative fair value basis. Refer to Note 8, “Goodwill and Intangible Assets” for further discussion.

⁽²⁾The total assets and liabilities of discontinued operations were presented as current in the September 30, 2020 balance sheet since we sold the cryobiological products business asset group and collected proceeds within one year of the date that the cryobiological products business asset group met held for sale criteria.

NOTE 3 — Reportable Segments

As reported in our Annual Report on Form 10-K for the year ended December 31, 2019, the structure of our 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”),~~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 Europe, Middle East and Asia. Our D&S West segment has principal operations in the United States and Latin America and 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 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.

812

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

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

legal, internal audit, and risk management. Corporate support functions are not currently allocated to the segments. All prior period amounts presented in the tables below have been reclassified based on our current reportable segments.

Our chief operating decision maker forms decisions about how to allocate resources to and evaluates performance of each of our segments based on operating income or loss as determined in our consolidated statements of income and comprehensive income.

Segment Financial Information


		Three Months Ended June 30, 2020																											Three Months Ended September 30, 2020
		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Corporate		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Corporate		Consolidated
Sales to external customers	Sales to external customers	$	79.7	$	106.8	$	63.7	$	64.1	$	(3.9)	$	—	$	310.4	Sales to external customers	$	85.1	$	91.1	$	64.8	$	40.5	$	(8.3)	$	0	$	273.2
Depreciation and amortization expense	Depreciation and amortization expense	3.4		3.0		3.6		13.1		—		0.5		23.6		Depreciation and amortization expense	3.9		2.9		3.7		8.2		0		0.5		19.2
Operating income (loss) ^{(1) (2)}	Operating income (loss) ^{(1) (2)}	8.1		27.8		14.3		(0.2)		—		(16.6)		33.4		Operating income (loss) ^{(1) (2)}	9.9		19.7		15.6		(1.7)		0		(15.4)		28.1
Capital expenditures	Capital expenditures	3.5		5.3		0.5		0.4		—		1.0		10.7		Capital expenditures	3.7		1.6		0.2		0.1		0		0.5		6.1


		Three Months Ended June 30, 2019																											Three Months Ended September 30, 2019
		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Corporate		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Corporate		Consolidated
Sales to external customers	Sales to external customers	$	77.7	$	115.7	$	47.6	$	72.6	$	(4.0)	$	—	$	309.6	Sales to external customers	$	70.4	$	93.3	$	48.9	$	128.6	$	(3.2)	$	0	$	338.0
Depreciation and amortization expense	Depreciation and amortization expense	4.0		2.9		4.6		4.1		—		0.4		16.0		Depreciation and amortization expense	3.7		2.6		2.0		15.1		0		0.4		23.8
Operating income (loss) ^{(1) (3)}		1.9		28.7		—		10.2		(1.4)		(14.1)		25.3
Operating income (loss) ^{(1) (2) (4)}																Operating income (loss) ^{(1) (2) (4)}	7.1		17.8		3.6		16.2		(0.2)		(21.0)		23.5
Capital expenditures	Capital expenditures	4.9		2.6		0.4		0.4		—		0.9		9.2		Capital expenditures	3.8		2.2		0.9		1.0		0		3.5		11.4


		Six Months Ended June 30, 2020																											Nine Months Ended September 30, 2020
		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Corporate		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Corporate		Consolidated
Sales to external customers	Sales to external customers	$	149.7	$	218.4	$	125.9	$	144.8	$	(7.3)	$	—	$	631.5	Sales to external customers	$	234.8	$	269.5	$	190.7	$	185.3	$	(15.6)	$	0	$	864.7
Depreciation and amortization expense	Depreciation and amortization expense	7.0		6.0		7.4		26.2		—		0.9		47.5		Depreciation and amortization expense	10.9		8.3		11.1		34.4		0		1.4		66.1
Operating income (loss) ^{(1) (2)}		15.0		54.3		23.0		0.9		—		(36.3)		56.9
Operating income (loss) ^{(1) (2) (3)}																Operating income (loss) ^{(1) (2) (3)}	24.9		58.7		38.6		(0.8)		0		(51.7)		69.7
Capital expenditures	Capital expenditures	8.6		7.0		1.5		0.9		—		3.0		21.0		Capital expenditures	12.3		8.4		1.7		1.0		0		3.5		26.9


		Six Months Ended June 30, 2019																											Nine Months Ended September 30, 2019
		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Corporate		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Corporate		Consolidated
Sales to external customers	Sales to external customers	$	146.4	$	233.7	$	82.7	$	143.1	$	(7.0)	$	—	$	598.9	Sales to external customers	$	216.8	$	280.0	$	131.3	$	272.0	$	(6.0)	$	0	$	894.1
Depreciation and amortization expense	Depreciation and amortization expense	8.2		5.8		9.1		8.2		—		0.7		32.0		Depreciation and amortization expense	11.9		7.8		11.1		23.3		0		1.1		55.2
Operating income (loss) ^{(1) (3)}		(0.4)		54.3		(10.7)		19.6		(2.5)		(30.4)		29.9
Operating income (loss) ^{(1) (2) (4)}																Operating income (loss) ^{(1) (2) (4)}	7.1		52.9		(7.1)		36.0		(0.9)		(51.4)		36.6
Capital expenditures	Capital expenditures	5.9		3.8		3.1		0.9		—		1.4		15.1		Capital expenditures	9.7		5.5		4.0		1.9		0		4.9		26.0

_______________

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

•Sales and operating loss were $71.3 and $17.3, for the nine months ended September 30, 2020, respectively.

•Sales and operating income were $60.1 and $2.6, for both the three and nine months ended September 30, 2019, respectively.

⁽²⁾Restructuring ~~costs/(credits)~~costs for the:

•three months ended ~~June~~September 30, 2020 were ~~$5.6~~$1.9 ($~~0.9~~0.1 - D&S East, $0.2 - D&S West, ~~$0.4 - E&C Cryogenics, $2.5~~$1.1 - E&C FinFans, ~~$1.6~~$0.5 - Corporate).

•three months ended ~~June~~September 30, 2019 were ~~$4.4~~$1.5 ($~~5.4 - D&S East, $0.1 - D&S West, $(1.2) - E&C Cryogenics, $0.1 - E&C FinFans).~~

•~~six months ended June 30, 2020 were $10.8 ($1.9 - D&S East, $1.0 - D&S West, $0.8 - E&C Cryogenics, $4.9 - E&C FinFans, and $2.2 - Corporate).~~

•~~six months ended June 30, 2019 were $11.8 ($7.8~~0.3 - D&S East, $0.4 - D&S West, ~~$2.2~~$0.2 - E&C Cryogenics, ~~$1.2~~$0.6 - E&C ~~FinFans, and $0.2 - Corporate)~~FinFans).

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

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

•nine months ended September 30, 2020 were $12.7 ($2.0 - D&S East, $1.2 - D&S West, $0.8 - E&C Cryogenics, $6.0 - E&C FinFans, and $2.7 - Corporate).

•nine months ended September 30, 2019 were $13.3 ($8.1 - D&S East, $0.8 - D&S West, $2.4 - E&C Cryogenics, $1.8 - E&C FinFans, and $0.2 - Corporate).

⁽²⁾⁽³⁾Includes a $2.6 gain on sale of a facility in China for ~~both~~ the ~~three and six~~nine months ended ~~June~~September 30, 2020 recorded within our D&S East segment.

⁽³⁾⁽⁴⁾Corporate includes transaction-related costs of ~~$1.8~~$4.3 and ~~$2.7~~$7.0 for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively (includes costs associated with business development and other one-time transactions).

Product Sales Information


		Three Months Ended June 30, 2020																							Three Months Ended September 30, 2020
		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Consolidated
Natural gas processing (including petrochemical) and industrial gas applications	Natural gas processing (including petrochemical) and industrial gas applications	$	0.9	$	—	$	23.5	$	42.1	$	—	$	66.5	Natural gas processing (including petrochemical) and industrial gas applications	$	0	$	0	$	24.6	$	27.1	$	0	$	51.7
Liquefied natural gas (LNG) applications	Liquefied natural gas (LNG) applications	22.1		14.7		34.7		9.9		(2.8)		78.6		Liquefied natural gas (LNG) applications	24.0		27.2		34.3		6.8		(3.2)		89.1
HVAC, power and refining applications	HVAC, power and refining applications	—		—		5.5		12.1		(0.2)		17.4		HVAC, power and refining applications	0		0		5.9		6.6		(0.2)		12.3
Bulk industrial gas applications	Bulk industrial gas applications	44.6		36.8		—		—		(0.3)		81.1		Bulk industrial gas applications	45.9		31.7		0		0		(0.9)		76.7
Packaged gas industrial applications	Packaged gas industrial applications	11.8		34.4		—		—		(0.6)		45.6		Packaged gas industrial applications	15.2		32.2		0		0		(4.0)		43.4
Cryobiological storage		0.3		20.9		—		—		—		21.2

Total	Total	$	79.7	$	106.8	$	63.7	$	64.1	$	(3.9)	$	310.4	Total	$	85.1	$	91.1	$	64.8	$	40.5	$	(8.3)	$	273.2

Three Months Ended June 30, 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 $ — $ — $ 31.4 $ 53.6 $ — $ 85.0
Liquefied natural gas (LNG) applications 16.3 19.9 5.3 10.5 — 52.0
HVAC, power and refining applications — — 10.9 8.5 — 19.4
Bulk industrial gas applications 47.9 35.7 — — (0.5) 83.1
Packaged gas industrial applications 13.5 35.4 — — (1.3) 47.6
Cryobiological storage — 24.7 — — (2.2) 22.5
Total $ 77.7 $ 115.7 $ 47.6 $ 72.6 $ (4.0) $ 309.6


		Six Months Ended June 30, 2020																							Three Months Ended September 30, 2019
		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Consolidated
Natural gas processing (including petrochemical) and industrial gas applications	Natural gas processing (including petrochemical) and industrial gas applications	$	0.9	$	—	$	45.1	$	104.1	$	(0.3)	$	149.8	Natural gas processing (including petrochemical) and industrial gas applications	$	1.0	$	0	$	24.3	$	88.6	$	(1.5)	$	112.4
Liquefied natural gas (LNG) applications	Liquefied natural gas (LNG) applications	41.8		33.5		68.0		18.5		(3.9)		157.9		Liquefied natural gas (LNG) applications	10.2		16.5		17.3		11.0		(0.1)		54.9
HVAC, power and refining applications	HVAC, power and refining applications	—		—		12.8		22.2		(0.3)		34.7		HVAC, power and refining applications	0		0		7.3		29.0		(0.6)		35.7
Bulk industrial gas applications	Bulk industrial gas applications	83.6		71.1		—		—		(1.2)		153.5		Bulk industrial gas applications	48.2		39.5		0		0		(1.0)		86.7
Packaged gas industrial applications	Packaged gas industrial applications	22.9		73.7		—		—		(1.5)		95.1		Packaged gas industrial applications	11.0		37.3		0		0		0		48.3
Cryobiological storage		0.5		40.1		—		—		(0.1)		40.5

Total	Total	$	149.7	$	218.4	$	125.9	$	144.8	$	(7.3)	$	631.5	Total	$	70.4	$	93.3	$	48.9	$	128.6	$	(3.2)	$	338.0


	Nine Months Ended September 30, 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	$	0.9	$	0	$	69.7	$	131.2	$	(0.3)	$	201.5
Liquefied natural gas (LNG) applications	65.8		60.7		102.3		25.3		(7.1)		247.0
HVAC, power and refining applications	0		0		18.7		28.8		(0.5)		47.0
Bulk industrial gas applications	129.5		102.9		0		0		(2.1)		230.3
Packaged gas industrial applications	38.6		105.9		0		0		(5.6)		138.9

Total	$	234.8	$	269.5	$	190.7	$	185.3	$	(15.6)	$	864.7

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

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

Six Months Ended June 30, 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 $ — $ — $ 57.3 $ 105.1 $ — $ 162.4
Liquefied natural gas (LNG) applications 28.4 42.0 9.5 20.9 — 100.8
HVAC, power and refining applications — — 15.9 17.1 — 33.0
Bulk industrial gas applications 88.1 73.5 — — (0.8) 160.8
Packaged gas industrial applications 29.9 71.5 — — (2.3) 99.1
Cryobiological storage — 46.7 — — (3.9) 42.8
Total $ 146.4 $ 233.7 $ 82.7 $ 143.1 $ (7.0) $ 598.9

Total Assets June 30,
2020 December 31,
2019
D&S East $ 528.0 $ 528.6
D&S West 422.2 414.9
E&C Cryogenics 437.8 430.3
E&C FinFans 1,002.8 1,028.0
Corporate 61.8 79.6
Total $ 2,452.6 $ 2,481.4

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

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


	Nine Months Ended September 30, 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	$	1.0	$	0	$	81.4	$	193.9	$	(1.5)	$	274.8
Liquefied natural gas (LNG) applications	38.6		58.2		26.5		32.2		(0.1)		155.4
HVAC, power and refining applications	0		0		23.4		45.9		(0.6)		68.7
Bulk industrial gas applications	136.3		113.0		0		0		(1.8)		247.5
Packaged gas industrial applications	$	40.9	$	108.8	$	0	$	0	$	(2.0)	$	147.7

Total	$	216.8	$	280.0	$	131.3	$	272.0	$	(6.0)	$	894.1


Total Assets	September 30, 2020		December 31, 2019
D&S East	$	531.9	$	528.6
D&S West	377.7		349.0
E&C Cryogenics	424.4		430.3
E&C FinFans	983.4		1,028.0
Corporate	66.1		76.9
Discontinued Operations	69.4		68.6
Total	$	2,452.9	$	2,481.4

NOTE 34 — 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 June 30, 2020																							Three Months Ended September 30, 2020
		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Consolidated
Point in time	Point in time	$	69.0	$	91.3	$	—	$	20.9	$	(1.4)	$	179.8	Point in time	$	77.7	$	81.0	$	4.2	$	17.2	$	(6.9)	$	173.2
Over time	Over time	10.7		15.5		63.7		43.2		(2.5)		130.6		Over time	7.4		10.1		60.6		23.3		(1.4)		100.0
Total	Total	$	79.7	$	106.8	$	63.7	$	64.1	$	(3.9)	$	310.4	Total	$	85.1	$	91.1	$	64.8	$	40.5	$	(8.3)	$	273.2


		Three Months Ended June 30, 2019																							Three Months Ended September 30, 2019
		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Consolidated
Point in time	Point in time	$	75.0	$	105.7	$	0.1	$	20.0	$	(4.0)	$	196.8	Point in time	$	64.1	$	79.6	$	10.8	$	19.5	$	(3.2)	$	170.8
Over time	Over time	2.7		10.0		47.5		52.6		—		112.8		Over time	6.3		13.7		38.1		109.1		0		167.2
Total	Total	$	77.7	$	115.7	$	47.6	$	72.6	$	(4.0)	$	309.6	Total	$	70.4	$	93.3	$	48.9	$	128.6	$	(3.2)	$	338.0


		Six Months Ended June 30, 2020																							Nine Months Ended September 30, 2020
		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Consolidated
Point in time	Point in time	$	128.1	$	193.7	$	—	$	42.1	$	(4.1)	$	359.8	Point in time	$	205.8	$	234.7	$	4.2	$	59.3	$	(11.0)	$	493.0
Over time	Over time	21.6		24.7		125.9		102.7		(3.2)		271.7		Over time	29.0		34.8		186.5		126.0		(4.6)		371.7
Total	Total	$	149.7	$	218.4	$	125.9	$	144.8	$	(7.3)	$	631.5	Total	$	234.8	$	269.5	$	190.7	$	185.3	$	(15.6)	$	864.7

Six Months Ended June 30, 2019
D&S East D&S West E&C Cryogenics E&C FinFans Intersegment Eliminations Consolidated
Point in time $ 138.9 $ 213.1 $ 0.3 $ 38.8 $ (7.0) $ 384.1
Over time 7.5 20.6 82.4 104.3 — 214.8
Total $ 146.4 $ 233.7 $ 82.7 $ 143.1 $ (7.0) $ 598.9

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

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


	Nine Months Ended September 30, 2019
	D&S East		D&S West		E&C Cryogenics		E&C FinFans		Intersegment Eliminations		Consolidated
Point in time	$	203.0	$	245.7	$	10.8	$	58.6	$	(6.0)	$	512.1
Over time	13.8		34.3		120.5		213.4		0		382.0
Total	$	216.8	$	280.0	$	131.3	$	272.0	$	(6.0)	$	894.1

Refer to Note 2,3, “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:


		June 30, 2020		December 31, 2019		Year-to-date Change ($)		Year-to-date Change (%)			September 30, 2020		December 31, 2019		Year-to-date Change ($)		Year-to-date Change (%)
Contract assets	Contract assets									Contract assets
Accounts receivable, net of allowances	Accounts receivable, net of allowances	$	184.4	$	202.6	$	(18.2)	(9.0)	%	Accounts receivable, net of allowances	$	163.6	$	191.6	$	(28.0)	(14.6)	%
Unbilled contract revenue	Unbilled contract revenue	85.5		86.1		(0.6)		(0.7)	%	Unbilled contract revenue	97.1		86.1		11.0		12.8	%

Contract liabilities	Contract liabilities									Contract liabilities
Customer advances and billings in excess of contract revenue	Customer advances and billings in excess of contract revenue	$	133.6	$	127.8	$	5.8	4.5	%	Customer advances and billings in excess of contract revenue	$	124.7	$	127.7	$	(3.0)	(2.3)	%
Long-term deferred revenue		0.5		0.8		(0.3)		(37.5)	%

Revenue recognized for the three months ended ~~June~~September 30, 2020 and 2019, that was included in the contract liabilities balance at the beginning of each year was $24.3 ~~$34.8~~ and ~~$29.6,~~$25.8, respectively. Revenue recognized for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, that was included in the contract liabilities balance at the beginning of each year was ~~$51.9~~$76.2 and ~~$66.7,~~$91.3, respectively. The amount of revenue recognized during the three and ~~six~~nine months ended ~~June~~September 30, 2020 from performance obligations satisfied or partially satisfied in previous periods as a result of changes in the estimates of variable consideration

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

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

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 ~~June~~September 30, 2020, the estimated revenue expected to be recognized in the future related to remaining performance obligations was ~~$697.3.~~$684.9. We expect to recognize revenue on approximately ~~84%~~ 83.7% of the remaining performance obligations over the next 12 months and with the remaining over the next few years thereafter.

NOTE 45 — Investments

The following table summarizes the components of investments:


		June 30, 2020		December 31, 2019			September 30, 2020		December 31, 2019
Investment in equity securities	Investment in equity securities	$	3.1	$	6.9	Investment in equity securities	$	3.8	$	6.9
Equity investments	Equity investments	6.2		6.5		Equity investments	5.9		6.5
Total investments	Total investments	$	9.3	$	13.4	Total investments	$	9.7	$	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 of ~~June~~September 30, 2020, the value of the investment was ~~$3.1.~~$3.8. For the three months ended ~~June~~September 30, 2020, the gain on investment in equity securities was ~~$1.0,~~$0.7, while for the ~~six~~nine months ended ~~June~~September 30, 2020, the loss on investment was ~~$3.8.~~$3.1. Gains and losses for this investment in equity securities were recorded in unrealized loss on investment in equity securities in the condensed consolidated statements of income and comprehensive income during the three and ~~six~~nine months ended ~~June~~September 30, 2020.

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

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

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 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 in the condensed consolidated balance sheet as of ~~June~~September 30, 2020 using Level 2 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 ~~$3.2~~$3.3 at ~~June~~September 30, 2020 and $2.9 at December 31, 2019. 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 were not material for the periods presented. Additionally, we have a 25% ownership interest in Liberty LNG which we invested in during the third quarter of 2019 which was valued at ~~$2.6 and~~$2.3 and $3.3 at ~~June~~September 30, 2020 and December 31, 2019, respectively. Earnings (losses) for the periods presented were not material.

NOTE 56 — Leases

As of ~~June~~September 30, 2020, operating right-of-use (“ROU”) assets was $31.2 and lease liabilities ~~were both $30.5~~was $31.0 ($~~5.1~~5.3 of which is classified as current liabilities). The weighted-average remaining term for lease contracts was ~~6.3~~6.0 years at ~~June~~September 30, 2020, with maturity dates ranging from October~~August~~ 2020 to February 2029. The weighted-average discount rate was 4.7% at ~~June~~September 30, 2020.

We incurred ~~$3.2~~$2.5 and ~~$2.1~~$3.0 of rental expense under operating leases for the three months ended ~~June~~September 30, 2020 and 2019, respectively, and ~~$6.2~~$8.4 and ~~$4.1~~$7.5 for the ~~six~~nine months ended ~~June~~September 30, 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. 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 provided by ~~(used in)~~ operating activities for the respective periods. This expense consisted primarily of payments for base rent

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

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

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

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 ~~June~~September 30, 2020:


2020	2020	$	3.7	2020	$	1.5
2021	2021	6.5		2021	6.8
2022	2022	6.1		2022	6.5
2023	2023	5.6		2023	5.9
2024	2024	5.3		2024	5.5
Thereafter ⁽¹⁾	Thereafter ⁽¹⁾	7.9		Thereafter ⁽¹⁾	8.5
Total future minimum lease payments	Total future minimum lease payments	$	35.1	Total future minimum lease payments	$	34.7

_______________

⁽¹⁾ As of ~~June~~September 30, 2020, future minimum lease payments for non-cancelable operating leases for period subsequent to 2024 relate to 78 leased facilities.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

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

NOTE 67 — Inventories

The following table summarizes the components of inventory:


		June 30, 2020		December 31, 2019			September 30, 2020		December 31, 2019
Raw materials and supplies	Raw materials and supplies	$	123.7	$	104.0	Raw materials and supplies	$	115.1	$	97.8
Work in process	Work in process	53.8		47.5		Work in process	48.5		47.3
Finished goods	Finished goods	71.1		67.9		Finished goods	74.0		64.9
Total inventories, net	Total inventories, net	$	248.6	$	219.4	Total inventories, net	$	237.6	$	210.0

The allowance for excess and obsolete inventory balance at ~~June~~September 30, 2020 and December 31, 2019 was ~~$9.6~~$9.7 and ~~$10.8,~~$10.6, respectively.

NOTE 78 — Goodwill and Intangible Assets

Goodwill

The following table represents the changes in goodwill by segment:


		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Consolidated
Balance at December 31, 2019	Balance at December 31, 2019	$	117.0	$	152.1	$	176.2	$	399.6	$	844.9	Balance at December 31, 2019	$	117.0	$	118.6	$	176.2	$	399.6	$	811.4
Foreign currency translation adjustments	Foreign currency translation adjustments	(1.0)		—		(0.1)		—		(1.1)		Foreign currency translation adjustments	4.5		0		0		1.3		5.8
Purchase price adjustment	Purchase price adjustment	—		—		—		0.4		0.4		Purchase price adjustment	0		0		0		0.4		0.4
Balance at June 30, 2020		$	116.0	$	152.1	$	176.1	$	400.0	$	844.2

Accumulated goodwill impairment loss at June 30, 2020 and December 31, 2019		$	—	$	82.5	$	40.9	$	23.7	$	147.1
Balance at September 30, 2020												Balance at September 30, 2020	$	121.5	$	118.6	$	176.2	$	401.3	$	817.6

We allocated a portion of the D&S West reporting unit’s goodwill to the cryobiological products business asset group on a relative fair value basis. Refer to “Note 2, “Discontinued Operations” for further information. We determined the fair value of D&S West reporting unit as of the goodwill reassignment date to assess whether there was an indication of impairment before the reassignment. We performed an interim goodwill impairment Step 1 test, as defined in our in our Annual Report on Form 10-K for the year ended December 31, 2019, on the D&S West reporting unit prior to the goodwill reassignment and determined that its fair value was substantially in excess of its carrying amount as of September 30, 2020.

Furthermore, when a portion of goodwill is allocated to an asset group to be disposed of, we test the goodwill remaining in the portion of the reporting unit to be retained for impairment. We elected to perform an interim goodwill Step 0 Test, as defined in our in our Annual Report on Form 10-K for the year ended December 31, 2019, on the D&S West reporting unit after the goodwill reassignment. As a result of the Step 0 Test, no impairment of the D&S West reporting unit after the goodwill reassignment was indicated.

Amounts included in accumulated goodwill impairment loss at both September 30, 2020 and December 31, 2019 were $129.0 ($64.4 - D&S West, $40.9 - E&C Cryogenics, $23.7 - E&C FinFans).

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

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

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⁾:


			June 30, 2020						December 31, 2019								September 30, 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:	Finite-lived intangible assets:										Finite-lived intangible assets:
Customer relationships	Customer relationships	13 years	$	380.1	$	(128.9)	$	380.3	$	(115.0)	Customer relationships	13 years	$	382.3	$	(136.4)	$	380.3	$	(115.0)
Unpatented technology	Unpatented technology	10 years	90.4		(17.1)		90.1		(13.0)		Unpatented technology	10 years	91.8		(19.6)		90.1		(13.0)
Patents and other	Patents and other	2 years	20.9		(19.6)		20.9		(9.8)		Patents and other	15 years	1.7		(0.4)		20.9		(9.8)
Trademarks and trade names	Trademarks and trade names	13 years	2.7		(1.5)		2.4		(1.2)		Trademarks and trade names	13 years	2.6		(1.4)		2.4		(1.2)
Land use rights	Land use rights	50 years	11.2		(1.4)		12.0		(1.5)		Land use rights	50 years	10.6		(1.3)		11.0		(1.2)
Total finite-lived intangible assets	Total finite-lived intangible assets	13 years	505.3		(168.5)		505.7		(140.5)		Total finite-lived intangible assets	13 years	489.0		(159.1)		504.7		(140.2)
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:										Indefinite-lived intangible assets:
Trademarks and trade names	Trademarks and trade names		163.7		—		163.9		—		Trademarks and trade names		158.8		—		157.9		—
Total intangible assets	Total intangible assets		$	669.0	$	(168.5)	$	669.6	$	(140.5)	Total intangible assets		$	647.8	$	(159.1)	$	662.6	$	(140.2)

_______________

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

Amortization expense for intangible assets subject to amortization was ~~$14.0~~$9.4 and ~~$7.3~~$13.7 for the three months ended ~~June~~September 30, 2020 and 2019, respectively, and ~~$28.0~~$37.3 and ~~$14.5~~$28.2 for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively. We estimate amortization expense to be recognized during the next five years as follows:


For the Year Ending December 31,	For the Year Ending December 31,			For the Year Ending December 31,
2020	2020	$	48.5	2020	$	46.7
2021	2021	35.5		2021	36.1
2022	2022	35.4		2022	36.0
2023	2023	35.1		2023	35.7
2024	2024	34.3		2024	34.8

Government Grants

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 the unaudited condensed consolidated balance sheets and generally recognized into income over the useful life of the associated assets (10 to 50 years).

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


		June 30, 2020		December 31, 2019			September 30, 2020		December 31, 2019
Current	Current	$	0.5	$	0.5	Current	$	0.5	$	0.5
Long-term	Long-term	6.9		7.2		Long-term	7.3		7.2
Total China Government Grants	Total China Government Grants	$	7.4	$	7.7	Total China Government Grants	$	7.8	$	7.7

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

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

NOTE 89 — Debt and Credit Arrangements

Summary of Outstanding Borrowings

The following table represents the components of our borrowings:


		June 30, 2020		December 31, 2019			September 30, 2020		December 31, 2019
Senior secured revolving credit facility and term loan:	Senior secured revolving credit facility and term loan:					Senior secured revolving credit facility and term loan:
Term loan due June 2024 ⁽¹⁾	Term loan due June 2024 ⁽¹⁾	$	441.6	$	447.2	Term loan due June 2024 ⁽¹⁾	$	438.8	$	447.2
Senior secured revolving credit facility due June 2024 ⁽²⁾	Senior secured revolving credit facility due June 2024 ⁽²⁾	95.2		119.0		Senior secured revolving credit facility due June 2024 ⁽²⁾	54.4		119.0
Unamortized debt issuance costs	Unamortized debt issuance costs	(4.9)		(5.5)		Unamortized debt issuance costs	(5.4)		(5.5)
Senior secured revolving credit facility and term loan, net of debt issuance costs	Senior secured revolving credit facility and term loan, net of debt issuance costs	531.9		560.7		Senior secured revolving credit facility and term loan, net of debt issuance costs	487.8		560.7

Convertible notes due November 2024:	Convertible notes due November 2024:					Convertible notes due November 2024:
Principal amount	Principal amount	$	258.8	$	258.8	Principal amount	$	258.8	$	258.8
Unamortized discount	Unamortized discount	(38.8)		(42.8)		Unamortized discount	(36.8)		(42.8)
Unamortized debt issuance costs	Unamortized debt issuance costs	(3.4)		(3.8)		Unamortized debt issuance costs	(3.3)		(3.8)
Convertible notes due November 2024, net of unamortized discount and debt issuance costs	Convertible notes due November 2024, net of unamortized discount and debt issuance costs	216.6		212.2		Convertible notes due November 2024, net of unamortized discount and debt issuance costs	218.7		212.2

Foreign facilities	Foreign facilities	—		4.4		Foreign facilities	0.2		4.4

Total debt, net of unamortized discount and debt issuance costs	Total debt, net of unamortized discount and debt issuance costs	748.5		777.3		Total debt, net of unamortized discount and debt issuance costs	706.7		777.3
Less: current maturities	Less: current maturities	12.5		16.3		Less: current maturities	11.3		16.3
Long-term debt	Long-term debt	$	736.0	$	761.0	Long-term debt	$	695.4	$	761.0

_______________

⁽¹⁾As of ~~June~~September 30, 2020, there were ~~$441.6~~$438.8 in borrowings outstanding under the term loan bearing an interest rate of ~~3.5%~~3.1%. The term loan is repayable annually in quarterly installments of 2.5% of the 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. Subsequent to the end of the third quarter of 2020, on October 2, 2020, $335.7 was paid down on our term loan due 2024 from proceeds of the Divestiture and other available cash on hand.

⁽²⁾The senior secured revolving credit facility due 2024 includes $100.0 sub limit for letters of credit, a $250.0 sub limit for discretionary letters of credit and $50.0 sub limit for swingline loans. As of ~~June~~September 30, 2020, there were ~~$95.2~~$54.4 in borrowings outstanding under the senior secured revolving credit facility due 2024 bearing a weighted-average interest rate of ~~2.5%~~2.1% and ~~$74.0~~$65.5 in letters of credit and bank guarantees outstanding supported by the senior secured revolving credit facility due 2024. As of ~~June~~September 30, 2020, the senior secured revolving credit facility due 2024 had availability of ~~$380.8.~~$430.1.

Senior Secured Revolving Credit 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”) and a term loan (together, the “2024 Credit Facilities”). The 2024 Credit Facilities mature on June 14, 2024.

•The SSRCF has a borrowing capacity of $550.0.

•The principal amount of the term loan is $450.0.

•The 2024 Credit Facilities bear interest at a base rate margin determined on a leveraged-based scale which ranges from 25 to 150 basis points for alternative base rate loans and 125 to 250 basis points for LIBOR loans.

•Interest and fees are payable on a quarterly basis (or if earlier, at the end of each interest period for LIBOR loans).

Significant financial covenants for the 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

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

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

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 2024 Credit Facilities include a number of other customary covenants including, but not

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

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

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

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 ~~June~~September 30, 2020, we were in compliance with all covenants.

The 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 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.

On September 28, 2020 and April 20, 2020, we amended our 2024 Credit Facilities. The ~~amendment,~~amendments, among other things, (i) ~~adjusted~~reduce the LIBO Screen Rate (as defined in the Credit Agreement) floor by half, effectively reducing all interest payable by Chart (ii) provide Chart with further flexibility to complete divestitures at its discretion by changing the “catch-all” permitted divestiture basket from a small annual cap to a more substantial life-of the-facility cap, (iii) adjust the pricing grid in order to accommodate potentially higher leverage ratios, ~~(ii) adjusted~~(iv) adjust factoring related definitions and other related provisions to provide Chart with greater flexibility to enter into such arrangements in the future, ~~(iii) incorporated~~(v) incorporate a “cash hoarding” prevention covenant and ~~(iv) incorporated~~(vi) incorporate 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 2024 Credit Facilities are otherwise substantially the same as those prior to the ~~amendment.~~amendments. We recorded $1.9 in deferred debt issuance costs related to ~~this amendment~~these amendments which are being amortized over the remaining term of the 2024 Credit Facilities.

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

We paid $11.9 in deferred debt issuance costs related to the SSRCF as amended. Deferred debt issuance costs are presented in other assets in the unaudited condensed consolidated balance sheets and are being amortized over the term of the SSRCF. At ~~June~~September 30, 2020, unamortized debt issuance costs associated with the SSRCF were ~~$9.8.~~$8.4.

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


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2020		2019		2020		2019
Interest expense, term loan due June 2024	Interest expense, term loan due June 2024	$	4.0	$	—	$	8.2	$	—	Interest expense, term loan due June 2024	$	3.4	$	4.6	$	11.6	$	4.6
Interest expense, senior secured revolving credit facility	Interest expense, senior secured revolving credit facility	0.6		2.6		1.2		5.8		Interest expense, senior secured revolving credit facility	0.4		1.0		1.6		6.8
Interest expense, senior secured revolving credit facility and term loan due June 2024	Interest expense, senior secured revolving credit facility and term loan due June 2024	$	4.6	$	2.6	$	9.4	$	5.8	Interest expense, senior secured revolving credit facility and term loan due June 2024	$	3.8	$	5.6	$	13.2	$	11.4

Financing costs amortization, senior secured revolving credit facility and term loan due 2024	Financing costs amortization, senior secured revolving credit facility and term loan due 2024	$	0.9	$	0.2	$	1.7	$	0.4	Financing costs amortization, senior secured revolving credit facility and term loan due 2024	$	0.9	$	0.8	$	2.6	$	1.2

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 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

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

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

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.

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

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

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

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

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 ~~$48.49~~$70.27 at the end of the period exceeded the conversion price of $58.725, the if-converted value ~~did not exceed~~exceeded the principal amount of the 2024 Notes by approximately $50.9 at ~~June~~September 30, 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 ~~June~~September 30, 2020, events for early conversion were not met, and thus the 2024 Notes were not convertible as of and for the fiscal quarter beginning ~~July~~October 1, 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, 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 June 30, Six Months Ended June 30,
2020 2019 2020 2019
2024 Notes, interest accretion of convertible notes discount $ 2.0 $ 1.9 $ 3.9 $ 3.7
2024 Notes, 1.0% contractual interest coupon 0.7 0.7 1.3 1.3
2024 Notes, total interest expense $ 2.7 $ 2.6 $ 5.2 $ 5.0
2024 Notes, financing costs amortization $ 0.2 $ 0.1 $ 0.4 $ 0.3

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

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

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
2024 Notes, interest accretion of convertible notes discount	$	2.0	$	2.0	$	5.9	$	5.7
2024 Notes, 1.0% contractual interest coupon	0.6		0.6		1.9		1.9
2024 Notes, total interest expense	$	2.6	$	2.6	$	7.8	$	7.6

2024 Notes, financing costs amortization	$	0.2	$	0.2	$	0.6	$	0.5

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.

Foreign Facilities

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. We are permitted to borrow up to USD equivalent ~~$21.1~~$80.9 under certain of our foreign facilities. As of ~~June~~September 30, 2020, there were 0USD equivalent $0.2 in borrowings outstanding under these facilities compared to USD equivalent $4.4 in borrowings under these facilities as of December 31, 2019 at a weighted average interest rate of 4.8%.

Certain of our foreign facilities allow us to request bank guarantees and letters of credit. None of these facilities allow revolving credit borrowings. We have foreign letters of credit and bank guarantees that totaled USD equivalent ~~$31.6~~$44.0 and $12.6 as of ~~June~~September 30, 2020 and December 31, 2019, respectively.

Letters of Credit

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 ~~June~~September 30, 2020 and December 31, 2019.

Fair Value Disclosures

The fair value of the 2024 Notes was approximately ~~105%~~139% and 132% of their par value as of ~~June~~September 30, 2020 and December 31, 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 – September 30, 2020

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

NOTE 910 — 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. 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, 2019	$	~~11.7~~11.5
Issued – warranty expense	~~3.1~~5.1
Warranty usage	~~(3.3)~~(4.7)
Balance at ~~June~~September 30, 2020	$	~~11.5~~11.9

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

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

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

NOTE 1011 — Business Combinations

Air-X-Changers Acquisition

On July 1, 2019, we completed the acquisition of ~~AXC~~Air-X-Changers (“AXC”) pursuant to the previously disclosed Asset Purchase Agreement dated as of May 8, ~~2019 (the “AXC acquisition”).~~2019. 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 2024 Credit Facilities and a public offering of Chart’s common stock in 2019.

AXC is a leading supplier of custom engineered and manufactured ACHX for the natural gas compression and processing industry and refining and petrochemical 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 and Chart Cooler 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.

As defined in our significant accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2019, we allocated the acquisition consideration to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The 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.

We estimated the fair value of acquired unpatented technology and trademarks and trade names using the relief from royalty method. The 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 estimated useful lives of identifiable finite-lived intangible assets range from 1 to 14 years.

The excess of the purchase price over the estimated fair values was assigned to goodwill. The 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 AXC integrating with our E&C FinFans segment. Goodwill recorded for the AXC acquisition is expected to be deductible for tax purposes.

The purchase price allocation reported at December 31, 2019 was preliminary and was based on provisional fair values. During the first six months of 2020 and prior to July 1, 2020, we received and analyzed new information about certain property, plant and equipment and subsequently increased associated deferred tax liabilities by $0.4.

2024

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

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

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


		June 30, 2020		Adjustments		As Previously Reported December 31, 2019			As Reported June 30, 2020		Adjustments		As Previously Reported December 31, 2019
Net assets acquired:	Net assets acquired:							Net assets acquired:
Identifiable intangible assets	Identifiable intangible assets	$	256.4	$	—	$	256.4	Identifiable intangible assets	$	256.4	$	—	$	256.4
Goodwill	Goodwill	287.9		0.4		287.5		Goodwill	287.9		0.4		287.5
Property, plant and equipment	Property, plant and equipment	34.2		—		34.2		Property, plant and equipment	34.2		—		34.2
Other assets	Other assets	53.1		—		53.1		Other assets	53.1		—		53.1
Liabilities	Liabilities	(31.9)		(0.4)		(31.5)		Liabilities	(31.9)		(0.4)		(31.5)
Net assets acquired	Net assets acquired	$	599.7	$	—	$	599.7	Net assets acquired	$	599.7	$	0	$	599.7

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


	Weighted-average Estimated Useful Life	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

_______________

⁽¹⁾Backlog and other identifiable intangible assets are included in “Patents and other” in Note 7,8, “Goodwill and Intangible Assets.”

Unaudited Supplemental Pro Forma Information

The following unaudited supplemental pro forma financial information is based on our historical consolidated financial statements and AXC’s historical 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, 2019.

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

•Adjustment for depreciation related to the step-up in basis of the acquired property, plant and equipment and change in estimated useful lives.

•Adjustment for amortization of acquired intangible assets.

•Adjustment for the change from last in, first out (LIFO) to weighted-average cost for the acquired inventory and the associated reduction of cost of sales.

•Adjustment to reflect an increase in interest expense resulting from interest on the term loan under the 2024 Credit Facilities to finance the AXC acquisition and amortization of related debt issuance costs.

•Adjustment to reflect the change in the estimated income tax rate for federal and state purposes.

•Adjustment to reflect the increase in weighted-average shares in connection with the equity issuance.

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

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

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

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 2019 fiscal year:

Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Pro forma sales $ 382.1 $ 747.7
Pro forma net income attributable to Chart Industries, Inc. 19.4 25.2
Pro forma net income attributable to Chart Industries, Inc. per common share, basic $ 0.54 $ 0.71
Pro forma net income attributable to Chart Industries, Inc. per common share, diluted 0.51 0.66


	Nine Months Ended September 30, 2019
Pro forma sales	$	1,042.9
Pro forma net income attributable to Chart Industries, Inc.	25.8

Pro forma net income attributable to Chart Industries, Inc. per common share, basic	$	0.78
Pro forma net income attributable to Chart Industries, Inc. per common share, diluted	0.74

NOTE 1112 — Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows:


		Foreign currency translation adjustments		Pension liability adjustments, net of taxes		Accumulated other comprehensive loss			Foreign currency translation adjustments		Pension liability adjustments, net of taxes		Accumulated other comprehensive loss
Balance at March 31, 2020		$	(35.2)	$	(10.6)	$	(45.8)
Balance at June 30, 2020								Balance at June 30, 2020	$	(27.7)	$	(10.2)	$	(37.9)
Other comprehensive income	Other comprehensive income	7.5		—		7.5		Other comprehensive income	19.8		0		19.8
Amounts reclassified from accumulated other comprehensive loss, net of income taxes	Amounts reclassified from accumulated other comprehensive loss, net of income taxes	—		0.4		0.4		Amounts reclassified from accumulated other comprehensive loss, net of income taxes	0		0.2		0.2
Net current-period other comprehensive income, net of taxes	Net current-period other comprehensive income, net of taxes	7.5		0.4		7.9		Net current-period other comprehensive income, net of taxes	19.8		0.2		20.0
Balance at June 30, 2020		$	(27.7)	$	(10.2)	$	(37.9)
Balance at September 30, 2020								Balance at September 30, 2020	$	(7.9)	$	(10.0)	$	(17.9)

Foreign currency translation adjustments Pension liability adjustments, net of taxes Accumulated other comprehensive loss
Balance at March 31, 2019 $ (22.4) $ (12.1) $ (34.5)
Other comprehensive income 1.3 — 1.3
Amounts reclassified from accumulated other comprehensive loss, net of income taxes — 0.3 0.3
Net current-period other comprehensive income, net of taxes 1.3 0.3 1.6
Balance at June 30, 2019 $ (21.1) $ (11.8) $ (32.9)


	Foreign currency translation adjustments		Pension liability adjustments, net of taxes		Accumulated other comprehensive loss
Balance at June 30, 2019	$	(21.1)	$	(11.8)	$	(32.9)
Other comprehensive loss	(16.8)		0		(16.8)
Amounts reclassified from accumulated other comprehensive loss, net of income taxes	0		0.3		0.3
Net current-period other comprehensive (loss) income, net of taxes	(16.8)		0.3		(16.5)
Balance at September 30, 2019	$	(37.9)	$	(11.5)	$	(49.4)

Foreign currency translation adjustments Pension liability adjustments, net of taxes Accumulated other comprehensive loss
Balance at December 31, 2019 $ (25.0) $ (10.9) $ (35.9)
Other comprehensive loss (2.7) — (2.7)
Amounts reclassified from accumulated other comprehensive loss, net of income taxes — 0.7 0.7
Net current-period other comprehensive (loss) income, net of taxes (2.7) 0.7 (2.0)
Balance at June 30, 2020 $ (27.7) $ (10.2) $ (37.9)


	Foreign currency translation adjustments		Pension liability adjustments, net of taxes		Accumulated other comprehensive loss
Balance at December 31, 2019	$	(25.0)	$	(10.9)	$	(35.9)
Other comprehensive income	17.1		0		17.1
Amounts reclassified from accumulated other comprehensive loss, net of income taxes	0		0.9		0.9
Net current-period other comprehensive income, net of taxes	17.1		0.9		18.0
Balance at September 30, 2020	$	(7.9)	$	(10.0)	$	(17.9)

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

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

Foreign currency translation adjustments Pension liability adjustments, net of taxes Accumulated other comprehensive loss
Balance at December 31, 2018 $ (17.5) $ (12.4) $ (29.9)
Other comprehensive loss (3.6) — (3.6)
Amounts reclassified from accumulated other comprehensive loss, net of income taxes — 0.6 0.6
Net current-period other comprehensive (loss) income, net of taxes (3.6) 0.6 (3.0)
Balance at June 30, 2019 $ (21.1) $ (11.8) $ (32.9)


	Foreign currency translation adjustments		Pension liability adjustments, net of taxes		Accumulated other comprehensive loss
Balance at December 31, 2018	$	(17.5)	$	(12.4)	$	(29.9)
Other comprehensive loss	(20.4)		0		(20.4)
Amounts reclassified from accumulated other comprehensive loss, net of income taxes	0		0.9		0.9
Net current-period other comprehensive (loss) income, net of taxes	(20.4)		0.9		(19.5)
Balance at September 30, 2019	$	(37.9)	$	(11.5)	$	(49.4)

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

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

NOTE 1213 — Earnings Per Share

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


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2020		2019		2020		2019
Net income attributable to Chart Industries, Inc.	Net income attributable to Chart Industries, Inc.	$	20.1	$	14.4	$	28.6	$	15.3	Net income attributable to Chart Industries, Inc.
Income from continuing operations										Income from continuing operations	$	15.6	$	13.8	$	31.4	$	15.0
Income from discontinued operations, net of tax										Income from discontinued operations, net of tax	6.1		5.0		18.9		19.0
Net income attributable to Chart Industries, Inc.										Net income attributable to Chart Industries, Inc.	$	21.7	$	18.8	$	50.3	$	34.0

Net income attributable to Chart Industries, Inc. per common share:
Basic		$	0.57	$	0.44	$	0.81	$	0.48
Diluted		$	0.57	$	0.41	$	0.80	$	0.45
Earnings per common share – basic:										Earnings per common share – basic:
Income from continuing operations										Income from continuing operations	$	0.44	$	0.39	$	0.89	$	0.45
Income from discontinued operations										Income from discontinued operations	0.18		0.14		0.53		0.57
Net income attributable to Chart Industries, Inc.										Net income attributable to Chart Industries, Inc.	$	0.62	$	0.53	$	1.42	$	1.02

Earnings per common share – diluted:										Earnings per common share – diluted:
Income from continuing operations										Income from continuing operations	$	0.43	$	0.38	$	0.88	$	0.43
Income from discontinued operations										Income from discontinued operations	0.17		0.13		0.53		0.54
Net income attributable to Chart Industries, Inc.										Net income attributable to Chart Industries, Inc.	$	0.60	$	0.51	$	1.41	$	0.97

Weighted average number of common shares outstanding – basic	Weighted average number of common shares outstanding – basic	35.18		32.47		35.48		32.02		Weighted average number of common shares outstanding – basic	35.23		35.76		35.40		33.28
Incremental shares issuable upon assumed conversion and exercise of share-based awards	Incremental shares issuable upon assumed conversion and exercise of share-based awards	0.13		0.44		0.18		0.48		Incremental shares issuable upon assumed conversion and exercise of share-based awards	0.28		0.38		0.21		0.44
Incremental shares issuable due to dilutive effect of convertible notes	Incremental shares issuable due to dilutive effect of convertible notes	—		1.25		—		1.23		Incremental shares issuable due to dilutive effect of convertible notes	0.43		0.59		0		1.04
Incremental shares issuable due to dilutive effect of warrants	Incremental shares issuable due to dilutive effect of warrants	—		0.56		—		0.52		Incremental shares issuable due to dilutive effect of warrants	0		0		0		0.29
Weighted average number of common shares outstanding – diluted	Weighted average number of common shares outstanding – diluted	35.31		34.72		35.66		34.25		Weighted average number of common shares outstanding – diluted	35.94		36.73		35.61		35.05

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


		Three Months Ended June 30,			Six Months Ended June 30,				Three Months Ended September 30,		Nine Months Ended September 30,
		2020	2019	2020	2019		2020	2019	2020	2019
Share-based awards	Share-based awards	0.65	0.14	0.51	0.14	Share-based awards	0.25	0.19	0.46	0.14
Convertible note hedge and capped call transactions ⁽¹⁾	Convertible note hedge and capped call transactions ⁽¹⁾	—	1.25	—	1.23	Convertible note hedge and capped call transactions ⁽¹⁾	0.43	0.59	0	1.04
Warrants	Warrants	4.41	—	4.41	—	Warrants	4.40	4.40	4.40	0
Total anti-dilutive securities	Total anti-dilutive securities	5.06	1.39	4.92	1.37	Total anti-dilutive securities	5.08	5.18	4.86	1.18

_______________

⁽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 8,9, “Debt and Credit Arrangements.”

NOTE 1314 — Income Taxes

Income tax expense o~~f $3.9~~of $6.2 and ~~$4.9~~$5.2 for the three months ended ~~June 30, 2020 and 2019, respectively, represents taxes on both U.S. and foreign earnings at a~~ ~~combined effective income tax rate~~ ~~of 15.7% and 25.1%, respectively. Income tax expense of $5.6 and $2.9 for the six months ended June~~September 30, 2020 and 2019, respectively, represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of ~~16.0%~~28.2% and ~~15.7%~~27.4%, respectively. Income tax expense of $8.9 and $5.3 for the nine months ended September 30, 2020 and 2019, respectively, represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of 21.5% and 25.7%, respectively.

The effective income tax rate of ~~15.7%~~28.2% and ~~16.0%~~21.5% for the three and ~~six~~nine months ended ~~June~~September 30, 2020 differed from the U.S. federal statutory rate of 21% primarily due to ~~excess tax benefits associated with stock compensation, partially offset by~~ the effect of income earned by our certain ~~of our~~ foreign entities being taxed at ~~higher rates than the U.S. federal statutory rate and~~

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

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

higher rates than the U.S. federal statutory rate, losses incurred by ~~certain~~some of our foreign operations for which no benefit was ~~recorded. We expect~~recorded, and the establishment of an APB 23 deferred tax liability associated with our ~~2020 full year effective income~~discontinued operations which is partially offset by excess tax ~~rate to be approximately 19%.~~benefits associated with share-based compensation.

The effective income tax rate of ~~25.1%~~27.4% and ~~15.7%~~25.7% for the three and ~~six~~nine months ended ~~June~~September 30, 2019 differed from the U.S. federal statutory rate of 21% primarily due to ~~excess tax benefits associated with stock compensation and the effect of~~ 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.~~recorded partially offset by excess tax benefits associated with share-based compensation.

As of ~~June~~September 30, 2020 and December 31, 2019, we had a liability for gross unrecognized tax benefits of $2.6 and $2.4, respectively. This amount includes $1.9 and $1.8 of unrecognized tax benefits as of ~~both June~~September 30, 2020 and December 31, 2019, respectively, which, if ultimately recognized, would reduce our annual effective income tax rate. We ~~recognize~~recognized interest and penalties of $0.5 related to uncertain tax positions in income tax ~~expense. These amounts were not significant for the periods presented.~~expense as of September 30, 2020.

NOTE 1415 — Share-based Compensation

During the ~~six~~nine months ended ~~June~~September 30, 2020, we granted 0.11 stock options, ~~0.09 restricted~~0.10 restricted stock units, and 0.04 performance units. The total fair value of awards granted to employees during the ~~six~~nine months ended ~~June~~September 30, 2020 was ~~$11.3~~.$11.6. In addition, our non-employee directors received stock awards with a total fair v~~alue~~value of ~~$0.3.~~$0.5. During the ~~six~~nine months ended ~~June~~September 30, 2020, participants in our stock option plans exercised options to purchase ~~0.12~~0.17 shares of our common stock, while ~~0.06~~0.07 stock options were forfeited.

Stock options generally have a ~~four-year~~four-year graded vesting period. Restricted stock and restricted stock units generally vest ratably over a ~~three-year~~three-year period. Performance units generally vest at the end of a ~~three-year~~three-year performance period based on the attainment of certain pre-determined performance condition targets. During the ~~six~~nine months ended ~~June~~September 30, 2020, ~~0.09~~ 0.10 restricted stock and restricted stock units vested while 0.02 restricted stock and restricted stock units were forfeited.

Share-based compensation ~~expen~~seexpense was ~~$2.0~~$2.2 and ~~$1.9~~$2.1 for the three months ended ~~June~~September 30, 2020 and 2019, respectively and ~~$4.9~~$6.8 and ~~$4.3~~$6.2 for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively. Share-based compensation expense is included in s~~elling,~~selling, general, and administrative expenses in the unaudited condensed consolidated statements of income and comprehensive income. As of ~~June~~September 30, 2020, total share-based compensation of ~~$12.8~~$10.7 is expected to be recognized over the weighted-average period of approximately ~~2.2 years.~~2.0 years.

NOTE 1516 — Commitments and Contingencies

Environmental

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 are currently in substantial compliance with all known environmental regulations. At ~~June~~September 30, 2020 and December 31, 2019, we had undiscounted accrued environmental reserves of ~~$0.4~~$0.3 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 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 remediation programs.

Although we believe we have adequately provided for the cost of all known environmental conditions, the 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 resolution of such matters will not have a material adverse effect on our financial position, liquidity, cash flows or results of operations.

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~~CHART INDUSTRIES, INC. AND SUBSIDIARIES~~

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

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

Legal Proceedings

Stainless Steel Cryobiological Tank Legal Proceedings

During the second quarter of 2018, Chart was named in lawsuits (including lawsuits 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 information available to date regarding use, maintenance and operation of the tank that was sold to the Pacific Fertility Center through an independent 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. In connection with the Divestiture, Chart retained certain potential liabilities and claims, including the claims asserted in connection with the litigation.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

(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.

We are occasionally subject to various legal claims related to performance under contracts, product liability, taxes, employment matters, environmental matters, intellectual property, and other matters incidental to the normal course of our business. 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 resolution of these legal claims in a way that could have a material adverse effect.

NOTE 1617 — Restructuring Activities

During the first ~~half~~nine months of 2020, we implemented certain cost reduction actions 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 ~~$5.6~~$1.9 and ~~$10.8~~$12.7 for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, consisting of mainly employee severance costs. ~~Subsequent to the end of the second quarter of 2020, on~~On July 17, 2020, we announced internally our intention to close our E&C FinFans air cooled heat exchanger leased facility in Tulsa, Oklahoma and consolidate its operations into our Beasley, Texas location at which we own 260 acres of land. This closure is a cost reduction measure within E&C FinFans to structure the business for profitable growth in equipment for midstream and upstream energy applications. Total costs related to this closure are expected to be approximately ~~$9 million~~$9.0, of which $1.5 has been spent year to date, associated with severance, relocation and moving ~~expenses, and we~~expenses. We expect ~~the~~this project to be completed ~~in approximately~~ ~~nine~~ ~~months. The estimate does not include remaining lease payments. We have the ability and intent to sublease the facility.~~by June 30, 2021. We are closely monitoring our end markets and order rates and will continue to take appropriate and timely actions as necessary.

Restructuring costs of ~~$4.4~~$1.5 and ~~$11.8~~$13.3 for the three and ~~six~~nine months ended ~~June~~September 30, 2019 were related to certain cost reductions or avoidance actions, including facility consolidations 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 in D&S East, as well as departmental restructuring, including headcount 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, 2020 and 2019:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
Severance:
Cost of sales	$	0.6	$	0.8	$	4.5	$	1.8
Selling, general, and administrative expenses	0.7		0.1		5.5		1.0
Total severance costs	1.3		0.9		10.0		2.8
Other restructuring:
Cost of sales	0.6		0.2		0.6		8.7
Selling, general, and administrative expenses	0		0.4		2.1		1.8
Total other restructuring costs	0.6		0.6		2.7		10.5

Total restructuring costs	$	1.9	$	1.5	$	12.7	$	13.3

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

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

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Severance:
Cost of sales $ 1.6 $ 0.5 $ 3.9 $ 1.0
Selling, general, and administrative expenses 1.9 (0.1) 4.8 0.9
Total severance costs 3.5 0.4 8.7 1.9
Other restructuring:
Cost of sales — 3.5 — 8.5
Selling, general, and administrative expenses 2.1 0.5 2.1 1.4
Total other restructuring costs 2.1 4.0 2.1 9.9
Total restructuring costs $ 5.6 $ 4.4 $ 10.8 $ 11.8

The following tables summarize our restructuring activities for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019:


		Three Months Ended June 30, 2020																							Three Months Ended September 30, 2020
		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Corporate		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Corporate		Consolidated
Balance at March 31, 2020		$	0.7	$	0.8	$	0.5	$	—	$	0.8	$	2.8
Balance at June 30, 2020														Balance at June 30, 2020	$	0.7	$	0.7	$	0.3	$	0	$	0.2	$	1.9
Restructuring costs	Restructuring costs	0.9		0.2		0.4		2.5		1.6		5.6		Restructuring costs	0.1		0.2		0		1.1		0.5		1.9
Cash payments and other	Cash payments and other	(0.9)		(0.3)		(0.6)		(2.5)		(2.2)		(6.5)		Cash payments and other	(0.1)		(0.5)		(0.3)		(0.9)		(0.4)		(2.2)
Balance at June 30, 2020		$	0.7	$	0.7	$	0.3	$	—	$	0.2	$	1.9
Balance at September 30, 2020														Balance at September 30, 2020	$	0.7	$	0.4	$	0	$	0.2	$	0.3	$	1.6


		Three Months Ended June 30, 2019																							Three Months Ended September 30, 2019
		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Corporate		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Corporate		Consolidated
Balance at March 31, 2019		$	0.8	$	0.3	$	0.7	$	—	$	0.1	$	1.9
Balance at June 30, 2019														Balance at June 30, 2019	$	0.7	$	0	$	0.6	$	0	$	0	$	1.3
Restructuring costs	Restructuring costs	5.4		0.1		(1.2)		0.1		—		4.4		Restructuring costs	0.3		0.4		0.2		0.6		0		1.5
Property, plant and equipment impairment		(2.1)		—		1.6		—		—		(0.5)

Cash payments and other	Cash payments and other	(3.4)		(0.4)		(0.5)		(0.1)		(0.1)		(4.5)		Cash payments and other	(0.4)		(0.3)		(0.5)		(0.6)		0		(1.8)
Balance at June 30, 2019		$	0.7	$	—	$	0.6	$	—	$	—	$	1.3
Balance at September 30, 2019														Balance at September 30, 2019	$	0.6	$	0.1	$	0.3	$	0	$	0	$	1.0


		Six Months Ended June 30, 2020																							Nine Months Ended September 30, 2020
		D&S East		D&S West		E&C Cryogenics		E&C FinFans		Corporate		Consolidated			D&S East		D&S West		E&C Cryogenics		E&C FinFans		Corporate		Consolidated
Balance at December 31, 2019	Balance at December 31, 2019	$	0.4	$	0.1	$	0.2	$	—	$	0.2	$	0.9	Balance at December 31, 2019	$	0.4	$	0.1	$	0.2	$	0	$	0.2	$	0.9
Restructuring costs	Restructuring costs	1.9		1.0		0.8		4.9		2.2		10.8		Restructuring costs	2.0		1.2		0.8		6.0		2.7		12.7
Cash payments and other	Cash payments and other	(1.6)		(0.4)		(0.7)		(4.9)		(2.2)		(9.8)		Cash payments and other	(1.7)		(0.9)		(1.0)		(5.8)		(2.6)		(12.0)
Balance at June 30, 2020		$	0.7	$	0.7	$	0.3	$	—	$	0.2	$	1.9
Balance at September 30, 2020														Balance at September 30, 2020	$	0.7	$	0.4	$	0	$	0.2	$	0.3	$	1.6


	Nine Months Ended September 30, 2019
	D&S East		D&S West		E&C Cryogenics		E&C FinFans		Corporate		Consolidated
Balance as of December 31, 2018	$	0.8	$	0	$	0	$	0	$	0.1	$	0.9
Restructuring costs	8.1		0.8		2.4		1.8		0.2		13.3
Property, plant and equipment impairment	(4.0)		0		(1.6)		0		0		(5.6)
Cash payments and other	(4.3)		(0.7)		(0.5)		(1.8)		(0.3)		(7.6)
Balance at September 30, 2019	$	0.6	$	0.1	$	0.3	$	0	$	0	$	1.0

NOTE 18 — Subsequent Events

Subsequent to the end of the third quarter of 2020, on October 1, 2020, we closed on the sale of the assets of the cryobiological products business within our D&S West segment to Cryoport, Inc. for net cash proceeds of $317.1, inclusive of the base purchase price of $320.0 less estimated closing date adjustments of $2.9. The strategic decision to divest of our cryobiological products business reflects our strategy and capital allocation approach to focus on our core capabilities and offerings. On October 2, 2020, we used proceeds from the Divestiture and other available cash on hand to pay down $335.7 of our term loan due 2024. Refer to Note 2, “Discontinued Operations” for further information regarding the Divestiture.

On October 13, 2020, we completed the acquisition of the Theodore, Alabama cryogenic trailer and hydrogen trailer (transport) assets of Worthington Industries, Inc. (NYSE: WOR) for $10 million in cash (“Alabama Trailers”). Alabama Trailers designs, manufactures and sells cryogenic trailers and hydrogen trailers used in industrial gas and energy applications. This acquisition will produce strong synergies by combining Chart’s deep knowledge of cryogenics and liquid hydrogen storage and handling with Alabama Trailers’ expertise and experience in the packaging and assembly of liquid hydrogen trailers.

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CHART INDUSTRIES, INC. AND SUBSIDIARIES

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

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

Six Months Ended June 30, 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 7.8 0.4 2.2 1.2 0.2 11.8
Property, plant and equipment impairment (4.0) — (1.6) — — (5.6)
Cash payments and other (3.9) (0.4) — (1.2) (0.3) (5.8)
Balance at June 30, 2019 $ 0.7 $ — $ 0.6 $ — $ — $ 1.3

~~NOTE 17 — Subsequent Event~~

~~On July 17, 2020,~~

1,276,595 shares for 30 million euros (equivalent to $35.3), and we ~~announced internally~~now hold 4.6% of the capital of McPhy post-offering. In conjunction with our ~~intention~~strategic investment, Chart and McPhy also executed a commercial Memorandum of Understanding (“MOU”). The MOU between McPhy and Chart is intended to ~~close our E&C FinFans air cooled heat exchanger leased facility in Tulsa, Oklahoma~~set the pace of commercial collaboration to stimulate new hydrogen demand for the parties’ respective equipment and ~~consolidate its operations into our Beasley, Texas location. Refer to Note 16, “Restructuring Activities” for further information.~~solutions globally.

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

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.

Overview

We are a leading independent global manufacturer of highly engineered equipment servicing multiple applications in the Energy and Industrial Gas markets. Our unique product portfolio is used in every phase of the liquid gas supply chain, including upfront engineering, service and repair. Being at the forefront of the clean energy transition, Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas and CO2 Capture amongst other applications. We are committed to excellence in environmental, social and corporate governance (ESG) issues both for our company as well as our customers. With over 25 global locations from the United States to Asia, Australia, India, Europe and South America, we maintain accountability and transparency to our team members, suppliers, customers and communities.

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

COVID-19 Update

While the recent outbreak and continued uncertainty associated with the coronavirus (COVID-19) did not have a material adverse effect on our reported results for the first ~~six~~nine months of 2020, we continue to actively monitor the impact of the COVID-19 outbreak on our results of operations for the remainder 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, or reemergence, of the outbreak and actions by government authorities to contain the outbreak or treat its impact, among other things.

Medical oxygen-related orders, generally for use with COVID-19 patients, increased ~~23.9%~~7.6% in the ~~second~~third quarter of 2020 compared to the ~~first quarter.~~second quarter making the third quarter the highest medical oxygen-related order quarter of 2020. We ~~saw peak medical oxygen demand in the month of April with related orders tapering~~had expected to see a reduction to more typical pre-COVID-19 order levels for these applications, but a heightened need for oxygen equipment in ~~late May and June.~~India was the primary driver of the increase in this demand.

In terms of macro drivers, COVID-19 has sparked an emphasis on health and clean energy transformation, in many cases, accelerating efforts and incenting governments to think through investments in renewable energy sources and storage, including hydrogen, carbon capture, biogas/biomethane and LNG. We continue to expand our footprint in these varied clean energy spaces as highlighted by our recent increased investments in hydrogen-related businesses. Governments have been responding on a massive scale with stimulus packages, many of which are targeted to kick starting or further progressing the transition to clean energy and to achieve their climate targets.

~~Second~~Third Quarter 2020 Highlights

~~June~~As previously announced on August 25, 2020, ~~was~~we signed a ~~record order month~~definitive agreement to divest our cryobiological products business within our Distribution & Storage Western Hemisphere (“D&S West”) segment to Cryoport, Inc. (“Buyer”). On October 1, 2020, we finalized the sale for ~~horizontal LNG~~net cash proceeds of $317.1 million, inclusive of the base purchase price of $320.0 million less estimated closing date adjustments of $2.9 million (the “Divestiture”). The strategic decision to divest of our cryobiological products business reflects our strategy and capital allocation approach to focus on our core capabilities and offerings.

We continue to see strengthening demand across the business with the exception of our Energy & Chemicals FinFans (“~~HLNG”~~E&C FinFans”) ~~vehicle tanks for over~~segment where third quarter 2020 orders were down $28.9 million when compared to the ~~road trucking (over $25 million in orders), a significant rebound after nearly two months~~third quarter of ~~customer shutdowns due to COVID-19.~~

2019. Ending backlog as of ~~June~~September 30, 2020 was ~~$697.3~~$684.9 million compared to ~~$752.8~~$745.2 million as of ~~June~~September 30, 2019. Backlog as of ~~June~~September 30, 2019 included $135 million of Venture Global’s Calcasieu Pass big LNG ~~orders.~~orders (“Calcasieu Pass”). As of the end of the ~~second~~third quarter 2020, there was ~~$72.0~~$46.4 million of Calcasieu Pass backlog remaining. Excluding Calcasieu Pass, consolidated backlog increased by $28.3 million or 4.6% in the current quarter compared to the prior year quarter. ~~In our Distribution and Storage Western Hemisphere (“~~Our D&S ~~West”)~~West segment ~~second quarter~~backlog at September 30, 2020 ~~backlog of $157.3~~totaled $179.7 million and is the highest in the history of the business; up ~~20.9%~~54.0% over the ~~second~~third quarter of 2019 and ~~4.2%~~23.3% over the ~~first~~second quarter of 2020, which was then a record. Furthermore, Distribution and Storage Eastern Hemisphere (“D&S East”) segment backlog ~~of $218.2 million was down slightly from the first quarter~~at September 30, 2020 level of $221.0 million, yet remained at one of the highest levels over the last five years. Also worth noting is that we have not had any material cancellations in our backlog year to date in any segment.

Second quarter 2020 sales of $310.4 million increased 0.3% from the second quarter of 2019 (decreased 7.4% organically), driven by sales of $23.7 million from our Air-X-Changers (“AXC”) business within our Energy & Chemicals FinFans (“E&C FinFans”) segment and higher sales from our systems and brazed aluminum heat exchangers within our Energy & Chemicals Cryogenics (“E&C Cryogenics”) segment as we continued to execute on big LNG orders in the second quarter of 2020. Our aftermarket, repair and service sales for the second quarter of 2020 represents over 13.5% of consolidated sales. This is an increase from both the first quarter of 2020 which was 13% and from the full year of 2019 which was 12.2%. In 2019, no individual quarter included aftermarket, repair and service sales greater than 12.8% of consolidated sales.totaled

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~~Second~~$229.0 million and is a record high compared to $203.8 million as of September 30, 2019 and $218.2 million as of June 30, 2020.

Third quarter 2020 gross margin as a percent of sales of ~~29.8%~~28.8% increased from ~~26.7%~~27.5% in the third quarter of 2019 and was flat to the 28.8% gross margin as a percent of sales reported in the second quarter of ~~2019 and increased from 28.5% in the first quarter of 2019.~~2020. The increase current quarter over prior year quarter was primarily driven by ~~was mainly driven by~~ Venture Global’s Calcasieu Pass LNG export terminal ~~project~~project.

Selling, general and ~~high margin, short-lead time replacement equipment.~~administrative (“SG&A”) expenses as a percentage of sales in the third quarter of 2020 decreased as compared to the third quarter of 2019 in three of our four segments as cost savings from recent restructuring efforts took effect.

Outlook

Our 2020 full year outlook reflects increased clarity in our markets and economy after the disruption earlier in the year from the onset of the COVID-19 pandemic. We continue to structure the business for profitable growth. Since January 1, 2020, we have reduced headcount by 25% (over 1,100 headcount reduction) while investing in the commercial and engineering organizations. ~~Through June, these changes are expected to result in annualized savings of $61.2 million. Subsequent to the end of the second quarter of 2020, on~~On July 17, 2020, we announced internally our intention to close our E&C FinFans segment’s air cooled heat exchanger leased facility in Tulsa, Oklahoma and consolidate its operations into our Beasley, Texas location at which we own 260 acres of land. This closure is a cost reduction measure within E&C FinFans to structure the business for profitable growth in equipment for midstream and upstream energy applications. Total costs related to this closure are expected to be approximately $9 million, of which $1.5 million has been spent year to date, associated with severance, relocation and moving expenses. ~~Annualized cost savings resulting from~~We expect this ~~facility consolidation is expected to be $12 million, and we expect the~~ project to be completed by June 30, 2021. Through September, these changes, along with other cost measures implemented in 2020, are expected to result in annualized savings of approximately ~~nine~~ ~~months. The estimate does not include remaining lease payments. We have the ability and intent to sublease the facility.~~$75 million.

Given the cost actions and our profitable volume mix, we expect gross margin as a percent of sales to ~~expand~~continue to expand throughout the ~~remainder~~last three months of 2020. Furthermore, Venture Global’s Calcasieu Pass project remains on schedule, with $100 million of expected revenue in our Energy & Chemicals Cryogenics (“E&C ~~Cryogenics~~Cryogenics”) segment in 2020. Our capital expenditures are flexible, and we will continue to assess the capital expenditures budget as the year progresses. ~~At this time, we~~We continue to anticipate capital expenditures spend will be in the $30 million to $35 million range.

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Consolidated Results for the Three Months Ended ~~June~~September 30, 2020 and 2019, and ~~March 31,~~June 30, 2020

The following table includes key metrics used to evaluate our business and measure our performance and represents selected financial data for our operating segments for the three months ended ~~June~~September 30, 2020 and 2019 and ~~March 31,~~June 30, 2020 (dollars in millions). Financial data for the three months ended ~~March 31,~~June 30, 2020 has been included to provide additional information regarding our business trends on a sequential quarter basis.

Selected Financial Information


		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
		June 30, 2020			June 30, 2019			March 31, 2020			Variance ($)		Variance (%)		Variance ($)		Variance (%)			September 30, 2020			September 30, 2019			June 30, 2020			Variance ($)		Variance (%)		Variance ($)		Variance (%)
Sales	Sales																		Sales
D&S East	D&S East	$	79.7		$	77.7		$	70.0		$	2.0	2.6	%	$	9.7	13.9	%	D&S East	$	85.1		$	70.4		$	79.7		$	14.7	20.9	%	$	5.4	6.8	%
D&S West	D&S West	106.8			115.7			111.6			(8.9)		(7.7)	%	(4.8)		(4.3)	%	D&S West	91.1			93.3			86.0			(2.2)		(2.4)	%	5.1		5.9	%
E&C Cryogenics	E&C Cryogenics	63.7			47.6			62.2			16.1		33.8	%	1.5		2.4	%	E&C Cryogenics	64.8			48.9			63.7			15.9		32.5	%	1.1		1.7	%
E&C FinFans	E&C FinFans	64.1			72.6			80.7			(8.5)		(11.7)	%	(16.6)		(20.6)	%	E&C FinFans	40.5			128.6			64.1			(88.1)		(68.5)	%	(23.6)		(36.8)	%
Intersegment eliminations	Intersegment eliminations	(3.9)			(4.0)			(3.4)			0.1		(2.5)	%	(0.5)		14.7	%	Intersegment eliminations	(8.3)			(3.2)			(3.9)			(5.1)		159.4	%	(4.4)		112.8	%
Consolidated	Consolidated	$	310.4		$	309.6		$	321.1		$	0.8	0.3	%	$	(10.7)	(3.3)	%	Consolidated	$	273.2		$	338.0		$	289.6		$	(64.8)	(19.2)	%	$	(16.4)	(5.7)	%

Gross Profit	Gross Profit																		Gross Profit
D&S East	D&S East	$	15.0		$	11.1		$	17.1		$	3.9	35.1	%	$	(2.1)	(12.3)	%	D&S East	$	19.6		$	16.3		$	15.0		$	3.3	20.2	%	$	4.6	30.7	%
D&S West	D&S West	38.8			42.6			38.7			(3.8)		(8.9)	%	0.1		0.3	%	D&S West	28.5			29.2			29.7			(0.7)		(2.4)	%	(1.2)		(4.0)	%
E&C Cryogenics	E&C Cryogenics	21.4			10.3			16.1			11.1		107.8	%	5.3		32.9	%	E&C Cryogenics	21.3			7.9			21.4			13.4		169.6	%	(0.1)		(0.5)	%
E&C FinFans	E&C FinFans	17.2			20.2			19.5			(3.0)		(14.9)	%	(2.3)		(11.8)	%	E&C FinFans	9.2			39.8			17.2			(30.6)		(76.9)	%	(8.0)		(46.5)	%
Intersegment eliminations	Intersegment eliminations	—			(1.4)			—			1.4		100.0	%	—		—	%	Intersegment eliminations	—			(0.3)			—			0.3		100.0	%	—		—	%
Consolidated	Consolidated	$	92.4		$	82.8		$	91.4		$	9.6	11.6	%	$	1.0	1.1	%	Consolidated	$	78.6		$	92.9		$	83.3		$	(14.3)	(15.4)	%	$	(4.7)	(5.6)	%

Gross Profit Margin	Gross Profit Margin																										Gross Profit Margin
D&S East	D&S East	18.8		%	14.3		%	24.4		%									D&S East	23.0		%	23.2		%	18.8		%
D&S West	D&S West	36.3		%	36.8		%	34.7		%									D&S West	31.3		%	31.3		%	34.5		%
E&C Cryogenics	E&C Cryogenics	33.6		%	21.6		%	25.9		%									E&C Cryogenics	32.9		%	16.2		%	33.6		%
E&C FinFans	E&C FinFans	26.8		%	27.8		%	24.2		%									E&C FinFans	22.7		%	30.9		%	26.8		%
Consolidated	Consolidated	29.8		%	26.7		%	28.5		%									Consolidated	28.8		%	27.5		%	28.8		%

SG&A Expenses	SG&A Expenses																		SG&A Expenses
D&S East	D&S East	$	6.1		$	7.8		$	9.4		$	(1.7)	(21.8)	%	$	(3.3)	(35.1)	%	D&S East	$	8.8		$	8.8		$	6.1		$	—	—	%	$	2.7	44.3	%
D&S West	D&S West	9.8			12.7			11.0			(2.9)		(22.8)	%	(1.2)		(10.9)	%	D&S West	7.7			10.2			8.3			(2.5)		(24.5)	%	(0.6)		(7.2)	%
E&C Cryogenics	E&C Cryogenics	6.3			8.5			6.5			(2.2)		(25.9)	%	(0.2)		(3.1)	%	E&C Cryogenics	4.8			5.1			6.3			(0.3)		(5.9)	%	(1.5)		(23.8)	%
E&C FinFans	E&C FinFans	6.2			7.1			7.3			(0.9)		(12.7)	%	(1.1)		(15.1)	%	E&C FinFans	4.4			10.7			6.2			(6.3)		(58.9)	%	(1.8)		(29.0)	%
Corporate	Corporate	16.6			14.1			19.7			2.5		17.7	%	(3.1)		(15.7)	%	Corporate	15.4			20.9			16.6			(5.5)		(26.3)	%	(1.2)		(7.2)	%
Consolidated	Consolidated	$	45.0		$	50.2		$	53.9		$	(5.2)	(10.4)	%	$	(8.9)	(16.5)	%	Consolidated	$	41.1		$	55.7		$	43.5		$	(14.6)	(26.2)	%	$	(2.4)	(5.5)	%

SG&A Expenses (% of Sales)	SG&A Expenses (% of Sales)																													SG&A Expenses (% of Sales)
D&S East	D&S East	7.7		%	10.0		%	13.4		%									D&S East	10.3		%	12.5		%	7.7		%
D&S West	D&S West	9.2		%	11.0		%	9.9		%									D&S West	8.5		%	10.9		%	9.7		%
E&C Cryogenics	E&C Cryogenics	9.9		%	17.9		%	10.5		%									E&C Cryogenics	7.4		%	10.4		%	9.9		%
E&C FinFans	E&C FinFans	9.7		%	9.8		%	9.0		%									E&C FinFans	10.9		%	8.3		%	9.7		%
Consolidated	Consolidated	14.5		%	16.2		%	16.8		%									Consolidated	15.0		%	16.5		%	15.0		%

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		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
		June 30, 2020			June 30, 2019			March 31, 2020			Variance ($)		Variance (%)		Variance ($)		Variance (%)			September 30, 2020			September 30, 2019			June 30, 2020			Variance ($)		Variance (%)		Variance ($)		Variance (%)
Operating Income (Loss) ⁽¹⁾	Operating Income (Loss) ⁽¹⁾																		Operating Income (Loss) ⁽¹⁾
D&S East⁽²⁾		$	8.1		$	1.9		$	6.9		$	6.2	326.3	%	$	1.2	17.4	%
D&S East^{(2) (3)}																			D&S East^{(2) (3)}	$	9.9		$	7.1		$	8.1		$	2.8	39.4	%	$	1.8	22.2	%
D&S West	D&S West	27.8			28.7			26.5			(0.9)		(3.1)	%	1.3		4.9	%	D&S West	19.7			17.8			20.1			1.9		10.7	%	(0.4)		(2.0)	%
E&C Cryogenics	E&C Cryogenics	14.3			—			8.7			14.3		100.0	%	5.6		64.4	%	E&C Cryogenics	15.6			3.6			14.3			12.0		333.3	%	1.3		9.1	%
E&C FinFans(3)	E&C FinFans(3)	(0.2)			10.2			1.1			(10.4)		(102.0)	%	(1.3)		(118.2)	%	E&C FinFans(3)	(1.7)			16.2			(0.2)			(17.9)		(110.5)	%	(1.5)		750.0	%
Corporate ⁽³⁾		(16.6)			(14.1)			(19.7)			(2.5)		17.7	%	3.1		(15.7)	%
Corporate ^{(3) (4)}																			Corporate ^{(3) (4)}	(15.4)			(21.0)			(16.6)			5.6		(26.7)	%	1.2		(7.2)	%
Intersegment eliminations	Intersegment eliminations	—			(1.4)			—			1.4		100.0	%	—		(100.0)	%	Intersegment eliminations	—			(0.2)			—			0.2		100.0	%	—		(100.0)	%
Consolidated	Consolidated	$	33.4		$	25.3		$	23.5		$	8.1	32.0	%	$	9.9	42.1	%	Consolidated	$	28.1		$	23.5		$	25.7		$	4.6	19.6	%	$	2.4	9.3	%

Operating Margin	Operating Margin																		Operating Margin
D&S East	D&S East	10.2		%	2.4		%	9.9		%									D&S East	11.6		%	10.1		%	10.2		%
D&S West	D&S West	26.0		%	24.8		%	23.7		%									D&S West	21.6		%	19.1		%	23.4		%
E&C Cryogenics	E&C Cryogenics	22.4		%	—		%	14.0		%									E&C Cryogenics	24.1		%	7.4		%	22.4		%
E&C FinFans	E&C FinFans	(0.3)		%	14.0		%	1.4		%									E&C FinFans	(4.2)		%	12.6		%	(0.3)		%
Consolidated	Consolidated	10.8		%	8.2		%	7.3		%									Consolidated	10.3		%	7.0		%	8.9		%

_______________

⁽¹⁾Restructuring ~~costs/(credits)~~costs for the three months ended:

•September 30, 2020 were $1.9 ($0.1 - D&S East, $0.2 - D&S West, $1.1 - E&C FinFans, and $0.5 - Corporate).

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

•June 30, 2020 were $5.6 ($0.9 - D&S East, $0.2 - D&S West, $0.4 - E&C Cryogenics, $2.5 - E&C FinFans, and $1.6 - Corporate).

•~~June 30, 2019 were $4.4 ($5.4 - D&S East, $0.1 - D&S West, $(1.2) - E&C Cryogenics, and $0.1 - E&C FinFans).~~

•~~March 31, 2020 were $5.2 ($1.0 - D&S East, $0.8 - D&S West, $0.4 - E&C Cryogenics, $2.4 - E&C FinFans, and $0.6 - Corporate).~~

⁽²⁾Includes a $2.6 gain on sale of a facility in China for the ~~three months ended June 30,~~second quarter of 2020.

⁽³⁾Includes transaction-related costs of ~~$1.8~~$1.4 related to integration activities for previous acquisitions ($0.2 D&S East, $0.7 - E&C FinFans, and $0.5 - Corporate).

⁽⁴⁾Includes transaction-related costs of $4.3 for the three months ended ~~June~~September 30, 2019.

Results of Operations for the Three Months Ended ~~June~~September 30, 2020 and 2019, and ~~March 31,~~June 30, 2020

Sales for the ~~second~~third quarter of 2020 compared to the same quarter in 2019 ~~increased $0.8~~decreased $64.8 million, from ~~$309.6~~$338.0 million to ~~$310.4~~$273.2 million, or ~~0.3% (decreased 7.4% organically), driven by~~19.2%. The decrease in sales~~of $23.7 million~~ ~~from AXC. AXC sales of $23.7 million are included in our E&C FinFans segment for the three months ended March 31, 2020. Excluding the impact of AXC, sales decreased, which~~ was primarily driven by the continued softness in demand for midstream and upstream compression equipment within our E&C FinFans segment, partially offset by an increase in big LNG sales within our E&C Cryogenics segment and increased sales of mobile equipment and engineered tanks and systems within our D&S East segment.

Gross profit ~~increased~~decreased during the ~~second~~third quarter of 2020 compared to the ~~second~~third quarter of 2019 by ~~$9.6~~$14.3 million or ~~11.6% (increased 6.3% organically),~~15.4%. This decrease was primarily driven by lower volumes in our E&C FinFans segment, offset by volume increases in our E&C Cryogenics segment. Gross profit as a percentage of sales increased ~~both on a sequential quarter and~~ quarter over prior year quarter ~~basis~~and decreased from the prior quarter on a consolidated basis. Furthermore, in the second quarter of 2020, our E&C FinFans segment’s gross profit as a percentage of E&C FinFans segment sales, excluding AXC’s gross profit of $4.4 million, was 31.7% as compared to 27.8% in the first quarter of 2019, which is an improvement of 3.9 percentage points on a quarter over prior year quarter basis and the result of ongoing cost structure improvements and favorable product mix.

~~Selling, general and administrative (“~~SG~~&A”)~~&A expenses decreased by ~~$5.2~~$14.6 million ~~($6.5 million organically),~~ or ~~10.4% (12.9% organically),~~26.2% during the ~~second~~third quarter of 2020 compared to the same quarter in 2019 ~~primarily~~ across multiple SG&A categories primarily as a result of cost reduction initiatives. ~~During~~During the first half of 2020, we implemented certain cost reduction actions 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 ~~$5.6~~$1.9 million, which were recorded in cost of sales ($~~1.6~~1.2 million) and SG&A ($~~4.0~~0.7 million) and consisted of mainly employee severance ~~costs. These restructuring activities were substantially completed by~~costs for the ~~end of the first half of~~three months ended September 30, 2020. These restructuring actions resulted in ~~costs~~cost savings of ~~$10.4~~$1.6 million in the second quarter of 2020 and are expected to result in annualized savings of $61.2 million. As previously mentioned, subsequent to the end of the second quarter 2020, we announced internally our intention to close our E&C FinFans air cooled heat exchanger leased facility in Tulsa, Oklahoma and consolidate its operations into our Beasley, Texas location. Total costs related to this closure are expected to be approximately $9 million associated with severance,

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relocation and moving expenses. Annualized cost savings resulting from this facility consolidation is expected to be $12 million, and we expect the project to be completed in approximately nine months.

During the first half of 2019, we implemented certain cost reduction or avoidance actions, including facility closures and relocations. These actions were primarily related to the consolidation of certain of our facilities within our E&C Cryogenics and E&C FinFans segments, streamlining commercial activities within our Lifecycle business, geographic realignment of manufacturing capacity in D&S East, as well as departmental restructuring, including headcount reductions. These actions resulted in property, plant and equipment disposals and severance costs of $11.8 million in the first half of 2019, which were recorded in cost of sales ($9.5 million) and SG&A ($2.3 million).

~~Interest Expense, Net and Financing Costs Amortization~~

Interest expense, net for the three months ended June 30, 2020 and 2019 was $7.5 million and $5.4 million, respectively. Interest expense for the three months ended June 30, 2020 included $0.7 million of 1.0% cash interest and $2.0 million of non-cash interest accretion expense related to the carrying value of the convertible notes due 2024, and $4.6 million in interest related to borrowings on our senior secured revolving credit facility and term loan. Financing costs amortization was $1.1 million for the three months ended June 30, 2020 as compared to $0.6 million for the three months ended June 30, 2019.

~~Foreign Currency Loss (Gain)~~

For the three months ended June 30, 2020 foreign currency loss was $0.9 million as compared to foreign currency gain of $0.2 million for the three months ended June 30, 2019. The variance between periods was primarily driven by fluctuations in the U.S dollar as compared to the euro and Chinese yuan.

~~Unrealized Gain On Investment In Equity Securities~~

~~During~~ the third quarter of 2019, we made an investment in Stabilis Energy, Inc. (“Stabilis”) by converting $7.0 million of a note receivable from Stabilis into an investment in their company stock. For the three months ended June 30, 2020, the unrealized gain on investment in equity securities on investment was $1.0 million from the subsequent mark-to-market.

~~Income Tax Expense~~

Income tax expense of $3.9 million and $4.9 million for three months ended June 30, 2020 and 2019 and represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of 15.7% and 25.1%, respectively. The effective income tax rate of 15.7% for the three months ended June 30, 2020 differed from the U.S. federal statutory rate of 21% primarily due to excess tax benefits associated with stock compensation, partially offset by the effect of income earned by certain of our foreign entities being taxed at higher rates than the U.S. federal statutory rate and losses incurred by certain of our foreign operations for which no benefit was recorded.

The effective income tax rate of 25.1% for the three months ended June 30, 2019 differed from the U.S. federal statutory rate of 21% primarily due to income taxes on certain foreign entities earnings being taxed at higher rates than the U.S. federal statutory rate and certain Chinese operations losses for which no benefit was recorded, partially offset by tax benefits associated with share-based compensation.

~~Net Income~~

~~As a result of the foregoing, net income attributable to Chart for the three months ended June 30, 2020 and 2019 was $20.1 million and $14.4 million, respectively.~~

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~~Consolidated Results for the Six Months Ended June 30, 2020 and 2019~~

The following table includes key metrics used to evaluate our business and measure our performance and represents selected financial data for our operating segments for the six months ended June 30, 2020 and 2019 (dollars in millions):

~~Selected Financial Information~~

Six Months Ended Current Year-to-date vs.
Prior Year-to-date Period
June 30, 2020 June 30, 2019 Variance
($) Variance
(%)
Sales
D&S East $ 149.7 $ 146.4 $ 3.3 2.3 %
D&S West 218.4 233.7 (15.3) (6.5) %
E&C Cryogenics 125.9 82.7 43.2 52.2 %
E&C FinFans 144.8 143.1 1.7 1.2 %
Intersegment eliminations (7.3) (7.0) (0.3) 4.3 %
Consolidated $ 631.5 $ 598.9 $ 32.6 5.4 %
Gross Profit
D&S East $ 32.1 $ 20.0 $ 12.1 60.5 %
D&S West 77.5 82.6 (5.1) (6.2) %
E&C Cryogenics 37.5 10.4 27.1 260.6 %
E&C FinFans 36.7 39.4 (2.7) (6.9) %
Intersegment eliminations — (2.5) 2.5 (100.0) %
Consolidated $ 183.8 $ 149.9 $ 33.9 22.6 %
Gross Profit Margin
D&S East 21.4 % 13.7 %
D&S West 35.5 % 35.3 %
E&C Cryogenics 29.8 % 12.6 %
E&C FinFans 25.3 % 27.5 %
Consolidated 29.1 % 25.0 %
SG&A Expenses
D&S East $ 15.5 $ 17.7 $ (2.2) (12.4) %
D&S West 20.8 26.0 (5.2) (20.0) %
E&C Cryogenics 12.8 17.5 (4.7) (26.9) %
E&C FinFans 13.5 13.9 (0.4) (2.9) %
Corporate 36.3 30.4 5.9 19.4 %
Consolidated $ 98.9 $ 105.5 $ (6.6) (6.3) %
SG&A Expenses (% of Sales)
D&S East 10.4 % 12.1 %
D&S West 9.5 % 11.1 %
E&C Cryogenics 10.2 % 21.2 %
E&C FinFans 9.3 % 9.7 %
Consolidated 15.7 % 17.6 %

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Six Months Ended Current Year-to-date vs.
Prior Year-to-date Period
June 30, 2020 June 30, 2019 Variance
($) Variance
(%)
Operating Income (Loss) ⁽¹⁾
D&S East⁽²⁾
$ 15.0 $ (0.4) $ 15.4 100.0 %
D&S West 54.3 54.3 — — %
E&C Cryogenics 23.0 (10.7) 33.7 100.0
E&C FinFans 0.9 19.6 (18.7) (95.4) %
Corporate ⁽³⁾
(36.3) (30.4) (5.9) 19.4 %
Intersegment eliminations — (2.5) 2.5 (100.0) %
Consolidated $ 56.9 $ 29.9 $ 27.0 90.3 %
Operating Margin
D&S East 10.0 % (0.3) %
D&S West 24.9 % 23.2 %
E&C Cryogenics 18.3 % (12.9) %
E&C FinFans 0.6 % 13.7 %
Consolidated 9.0 % 5.0 %

~~_______________~~

⁽¹⁾~~Restructuring costs for the six months ended:~~

•~~June 30, 2020 were $10.8 ($1.9 - D&S East, $1.0 - D&S West, $0.8 - E&C Cryogenics, $4.9 - E&C FinFans, and $2.2 - Corporate).~~

•~~June 30, 2019 were $11.8 ($7.8 - D&S East, $0.4 - D&S West, $2.2 - E&C Cryogenics, $1.2 - E&C FinFans, and $0.2 - Corporate).~~

⁽²⁾~~Includes a $2.6 gain on sale of a facility in China for the six months ended June 30,~~ 2020.

⁽³⁾~~Includes transaction-related costs of $2.7 for the six months ended June 30, 2019.~~

~~Results of Operations for the Six Months Ended June 30, 2020 and 2019~~

~~Sales for the first half of 2020 compared to the same period in 2019 increased $32.6 million, from $598.9 million to $631.5 million, or 5.4% (decreased 4.3% organically), driven by sales~~ of ~~$58.6 million~~from AXC. AXC sales of $58.6 million are included in our E&C FinFans segment for the six months ended June 30, 2020. Excluding the impact of AXC, sales decreased, which was primarily driven by the softness in demand for midstream and upstream compression equipment within our E&C FinFans segment, partially offset by an increase in big LNG sales within our E&C Cryogenics segment.

Gross profit increased during the first half of 2020 compared to the first half of 2019 by $33.9 million or 22.6% (increased 16.4% organically), primarily driven by volume in our E&C Cryogenics segment. Gross profit as a percentage of sales increased year-to-date June 30, 2020 compared to the same period in 2019 on a consolidated basis and within two of our four operating segments: D&S East and E&C Cryogenics. Furthermore, in the first half of 2020, our E&C FinFans segment’s gross profit as a percentage of E&C FinFans segment sales, excluding AXC’s gross profit of $9.3 million, was 31.8% as compared to 27.5% in the first half of 2019, which is an improvement of 4.3 percentage points as compared to the same prior year period and the result of ongoing cost structure improvements and favorable product mix..

SG&A expenses decreased by $6.6 million ($10.4 million organically), or 6.3% (9.9% organically), during the first half of 2020 compared to the same period in 2019 primarily across multiple SG&A categories as a result of cost reduction initiatives. As previously mentioned, during the first half of 2020, we implemented certain cost reduction actions 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 $10.8 million, which were recorded in cost of sales ($3.9 million) and SG&A ($6.9 million) and consisted of mainly employee severance costs. These restructuring activities were substantially completed by the end of the first half of 2020 as previously mentioned. As previously mentioned, subsequent to the end of the second quarter 2020, we announced internally our intention to close our E&C FinFans air cooled heat exchanger leased facility in Tulsa, Oklahoma and consolidate its operations into our Beasley, Texas location. Total costs related to this closure are expected to be approximately $9 million associated with severance, relocation and moving expenses. Annualized cost savings resulting from this facility consolidation isare expected to be $12 million, and we expect the project to be completed by June 30, 2021. Through September, these changes, along with other cost measures implemented in 2020, are expected to result in annualized savings of approximately ~~nine months.~~$75 million.

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~~As also previously mentioned, during~~During the ~~first half~~third quarter of 2019, we implemented certain cost reduction or avoidance actions, including facility closures and ~~relocations. These actions were primarily related to the consolidation of certain of our facilities within~~relocations in both our E&C ~~Cryogenics~~FinFans and ~~E&C FinFans segments, streamlining commercial activities within our Lifecycle business, geographic realignment of manufacturing capacity in~~ D&S ~~East, as well as departmental restructuring, including headcount reductions.~~West segments. These actions resulted in ~~property, plant and equipment disposals and severance~~restructuring costs of ~~$11.8~~$1.5 million, primarily for severance in the ~~first half~~third quarter of 2019, which were recorded in cost of sales ($~~9.5~~1.0 million) and SG&A ($~~2.3~~0.5 million).

Interest Expense, Net and Financing Costs Amortization

Interest expense, net for the ~~six~~three months ended ~~June~~September 30, 2020 and 2019 was ~~$14.7~~$6.5 million and ~~$10.7~~$7.8 million, respectively. The decrease in interest expense, net, is primarily due to lower borrowings outstanding on our senior secured revolving credit facility during the third quarter of 2020 as compared to the third quarter of 2019. Interest expense for the ~~six~~three months ended ~~June~~September 30, 2020 included ~~$1.3~~$0.6 million of 1.0% cash interest and ~~$3.9~~$2.0 million of non-cash interest accretion expense related to the carrying value of the convertible notes due 2024, and ~~$9.4~~$3.8 million in interest related to borrowings on our senior secured revolving credit facility and term loan. Financing costs amortization was ~~$2.1~~$1.1 million for ~~first half of~~the three months ended September 30, 2020 as compared to $1.0 million for the ~~first half of~~three months ended September 30, 2019.

Foreign Currency ~~Loss (Gain)~~Gain

For the ~~six~~three months ended ~~June~~September 30, 2020 foreign currency ~~loss~~gain was ~~$1.2~~$0.8 million as compared to foreign currency gain of ~~$0.3~~$1.7 million for the ~~six~~three months ended ~~June~~September 30, 2019. The variance between periods was primarily driven by fluctuations in the U.S dollar as compared to the euro and Chinese yuan.

Unrealized ~~Loss~~Gain On Investment In Equity Securities

During the third quarter of 2019, we made an investment in Stabilis Energy, Inc. (“Stabilis”) by converting $7.0 million of a note receivable from Stabilis into an investment in their company stock. For the three months ended September 30, 2020 and 2019 we recognized an unrealized gain on investment in equity securities on investment of $0.7 million and $2.6 million, respectively, from the subsequent mark-to-market.

Income Tax Expense

Income tax expense of $6.2 million and $5.2 million for the three months ended September 30, 2020 and 2019 and represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of 28.2% and 27.4%, respectively. The effective income tax rate of 28.2% for the three months ended September 30, 2020 differed from the U.S. federal statutory rate of 21% primarily due to excess tax benefits associated with share-based compensation, which is offset by the effect of income earned by our certain foreign entities being taxed at higher rates than the U.S. federal statutory rate, losses incurred by some of our foreign operations for which no benefit was recorded, and the establishment of an APB 23 deferred tax liability associated with our discontinued operations.

The effective income tax rate of 27.4% for the three months ended September 30, 2019 differed from the U.S. federal statutory rate of 21% primarily due to excess tax benefits associated with share-based compensation partially offset by the effect of income earned by certain of our foreign entities being taxed at higher rates than the U.S. federal statutory rate and losses incurred by certain of our Chinese operations for which no benefit was recorded.

Net Income from Continuing Operations

As a result of the foregoing, net income attributable to Chart for the three months ended September 30, 2020 and 2019 was $15.6 million and $13.8 million, respectively.

Discontinued Operations

The results from our cryobiological related products business formerly reported in our D&S West segment are reflected in our consolidated financial statements as discontinued operations for all periods presented. For further information, refer to Note 2, “Discontinued Operations” of our unaudited condensed consolidated financial statements included under Item 1, “Financial Statements” in this report.

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Consolidated Results for the Nine Months Ended September 30, 2020 and 2019

The following table includes key metrics used to evaluate our business and measure our performance and represents selected financial data for our operating segments for the nine months ended September 30, 2020 and 2019 (dollars in millions):

Selected Financial Information


	Nine Months Ended								Current Year-to-date vs. Prior Year-to-date Period
	September 30, 2020			September 30, 2019			Variance ($)		Variance (%)
Sales
D&S East	$	234.8		$	216.8		$	18.0	8.3	%
D&S West	269.5			280.0			(10.5)		(3.8)	%
E&C Cryogenics	190.7			131.3			59.4		45.2	%
E&C FinFans	185.3			272.0			(86.7)		(31.9)	%
Intersegment eliminations	(15.6)			(6.0)			(9.6)		160.0	%
Consolidated	$	864.7		$	894.1		$	(29.4)	(3.3)	%

Gross Profit
D&S East	$	51.7		$	36.7		$	15.0	40.9	%
D&S West	87.8			88.8			(1.0)		(1.1)	%
E&C Cryogenics	58.8			18.3			40.5		221.3	%
E&C FinFans	45.9			79.4			(33.5)		(42.2)	%
Intersegment eliminations	—			(1.0)			1.0		(100.0)	%
Consolidated	$	244.2		$	222.2		$	22.0	9.9	%

Gross Profit Margin
D&S East	22.0		%	16.9		%
D&S West	32.6		%	31.7		%
E&C Cryogenics	30.8		%	13.9		%
E&C FinFans	24.8		%	29.2		%
Consolidated	28.2		%	24.9		%

SG&A Expenses
D&S East	$	24.4		$	26.5		$	(2.1)	(7.9)	%
D&S West	25.6			32.4			(6.8)		(21.0)	%
E&C Cryogenics	17.6			22.6			(5.0)		(22.1)	%
E&C FinFans	17.9			24.6			(6.7)		(27.2)	%
Corporate	51.7			51.3			0.4		0.8	%
Consolidated	$	137.2		$	157.4		$	(20.2)	(12.8)	%

SG&A Expenses (% of Sales)
D&S East	10.4		%	12.2		%
D&S West	9.5		%	11.6		%
E&C Cryogenics	9.2		%	17.2		%
E&C FinFans	9.7		%	9.0		%
Consolidated	15.9		%	17.6		%

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	Nine Months Ended								Current Year-to-date vs. Prior Year-to-date Period
	September 30, 2020			September 30, 2019			Variance ($)		Variance (%)
Operating Income (Loss) ⁽¹⁾
D&S East⁽²⁾	$	24.9		$	7.1		$	17.8	250.7	%
D&S West	58.7			52.9			5.8		11.0	%
E&C Cryogenics	38.6			(7.1)			45.7		100.0
E&C FinFans	(0.8)			36.0			(36.8)		(102.2)	%
Corporate ^{(3) (4)}	(51.7)			(51.4)			(0.3)		0.6	%
Intersegment eliminations	—			(0.9)			0.9		(100.0)	%
Consolidated	$	69.7		$	36.6		$	33.1	90.4	%

Operating Margin
D&S East	10.6		%	3.3		%
D&S West	21.8		%	18.9		%
E&C Cryogenics	20.2		%	(5.4)		%
E&C FinFans	(0.4)		%	13.2		%
Consolidated	8.1		%	4.1		%

_______________

⁽¹⁾Restructuring costs for the nine months ended:

•September 30, 2020 were $12.7 ($2.0 - D&S East, $1.2 - D&S West, $0.8 - E&C Cryogenics, $6.0 - E&C FinFans, and $2.7 - Corporate).

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

⁽²⁾Includes a $2.6 gain on sale of a facility in China for the nine months ended September 30, 2020.

⁽³⁾Includes transaction-related costs of $7.0 for the nine months ended September 30, 2019.

⁽⁴⁾Includes transaction-related costs of $2.6 related to integration activities for previous acquisitions ($0.2 - D&S East, $0.7 - E&C FinFans, and $1.7 - Corporate) for the nine months ended September 30, 2019.

Results of Operations for the Nine Months Ended September 30, 2020 and 2019

Sales for the first nine months of 2020 compared to the same period in 2019 decreased $29.4 million, from $894.1 million to $864.7 million, or 3.3% (decreased 4.9% organically). AXC sales of $71.3 million and $60.1 million are included in our E&C FinFans segment for the nine months ended September 30, 2020 and 2019, respectively. Excluding the impact of AXC, sales decreased, which was primarily driven by the softness in demand for midstream and upstream compression equipment within our E&C FinFans segment, partially offset by an increase in big LNG sales within our E&C Cryogenics segment.

Gross profit increased during the first nine months of 2020 compared to the same period of 2019 by $22.0 million or 9.9% (increased 15.5% organically), primarily driven by volume in our E&C Cryogenics segment. Gross profit as a percentage of sales increased year-to-date September 30, 2020 compared to the same period in 2019 on a consolidated basis and within three of our four operating segments: D&S East, D&S West and E&C Cryogenics. Furthermore, in the first nine months of 2020, our E&C FinFans segment’s gross profit as a percentage of E&C FinFans segment sales, excluding AXC’s gross profit of $8.0 million, was 33.2% as compared to 29.1% in the first nine months of 2019, which is an improvement of 4.1 percentage points as compared to the same prior year period and the result of ongoing cost structure improvements and favorable product mix.

SG&A expenses decreased by $20.2 million ($19.9 million organically), or 12.8% (13.1% organically), during the first nine months of 2020 compared to the same period in 2019 across multiple SG&A categories primarily as a result of cost reduction initiatives. As previously mentioned, during the nine months of 2020, we implemented certain cost reduction actions 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 $12.7 million, which were recorded in cost of sales ($5.1 million) and SG&A ($7.6 million) and consisted of mainly employee severance costs. These restructuring activities were substantially completed by the end of the first half of 2020 as previously mentioned. As previously mentioned, subsequent to the end of the second quarter 2020, we announced internally our intention to close our E&C FinFans air cooled heat exchanger leased facility in Tulsa, Oklahoma and consolidate its operations into our Beasley, Texas location. Total costs related to this closure are expected to be approximately $9 million associated with severance, relocation, asset

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disposals and moving expenses. As previously mentioned, annualized cost savings resulting from this facility consolidation are expected to be $12 million, and we expect the project to be completed by June 30, 2021.

As also previously mentioned, during the nine months of 2019, we implemented certain cost reduction or avoidance actions, including facility closures and relocations. These actions were primarily related to facility consolidations in E&C Cryogenics, D&S West and E&C FinFans and a streamlining of the commercial activities surrounding our aftermarket services business in E&C Cryogenics, 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 property, plant and equipment disposals and severance costs of $13.3 million in the nine months of 2019, which were recorded in cost of sales ($10.5 million) and SG&A ($2.8 million).

Interest Expense, Net and Financing Costs Amortization

Interest expense, net for the nine months ended September 30, 2020 and 2019 was $21.2 million and $18.5 million, respectively. The increase in interest expense, net is mainly due to the nine months ended September 30, 2020 having a full nine months of term loan interest included whereas the prior comparable period only included three months of term loan interest. This was partially offset by a decrease in our interest expense on our senior secured revolving credit facility during the nine months ended September 30, 2020. Interest expense for the nine months ended September 30, 2020 included $1.9 million of 1.0% cash interest and $5.9 million of non-cash interest accretion expense related to the carrying value of the convertible notes due 2024, and $13.2 million in interest related to borrowings on our senior secured revolving credit facility and term loan. Financing costs amortization was $3.2 million for first nine months of 2020 as compared to $2.0 million for the first nine months of 2019.

Foreign Currency Loss (Gain)

For the nine months ended September 30, 2020 foreign currency loss was $0.8 million as compared to foreign currency gain of $1.9 million for the nine months ended September 30, 2019. The variance between periods was primarily driven by fluctuations in the U.S dollar as compared to the euro and Chinese yuan.

Unrealized Loss (Gain) On Investment In Equity Securities

As previously mentioned, during the third quarter of 2019, we made an investment in Stabilis by converting $7.0 million of a note receivable from Stabilis into an investment in their company stock. For the ~~six~~nine months ended ~~June~~September 30, 2020, ~~the~~we recognized an unrealized loss on investment in equity securities ~~on investment was $3.8~~of $3.1 million as compared to an unrealized gain of $2.6 million for the nine months ended September 30, 2019, from the subsequent mark-to-market.

Income Tax Expense

Income tax expense of ~~$5.6~~$8.9 million and ~~$2.9~~$5.3 million for ~~six~~the nine months ended ~~June~~September 30, 2020 and 2019 and represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of ~~16.0%~~21.5% and ~~15.7%~~25.7%, respectively. The effective income tax rate of ~~16.0%~~21.5% for the ~~six~~nine months ended ~~June~~September 30, 2020 differed from the U.S. federal statutory rate of 21% primarily due to excess tax benefits associated with ~~stock~~share-based compensation, partially offset by the effect of income earned by certain of our foreign entities being taxed at higher rates than the U.S. federal statutory rate and losses incurred by certain of our foreign operations for which no benefit was recorded.

The effective income tax rate of ~~15.7%~~25.7% for the ~~six~~nine months ended ~~June~~September 30, 2019 differed from the U.S. federal statutory rate of 21% primarily due to excess tax benefits associated with share-based compensation ~~and~~partially offset by the effect of income ~~taxes on~~earned by certain of our foreign entities ~~earnings~~ being taxed at higher rates than the U.S. federal statutory rate ~~partially offset~~and losses incurred by certain of our Chinese operations ~~losses~~ for which no benefit was recorded.

Net Income from Continuing Operations

As a result of the foregoing, net income attributable to Chart for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 was ~~$28.6~~$31.4 million and ~~$15.3~~$15.0 million, respectively.

Discontinued Operations

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Segment Results

Our reportable and operational segments include: D&S East, D&S West, E&C Cryogenics, and E&C FinFans. 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. For further information, refer to Note 2,3, “Reportable Segments” note of our unaudited condensed consolidated financial statements included under Item 1, “Financial Statements” in this report.

~~Table~~As a result of ~~Contents~~

the Divestiture on October 1, 2020, we are currently evaluating a change in our organizational structure and how we manage our business, including our segment structure.

The following tables include key metrics used to evaluate our business and measure our performance and represents selected financial data for our operating segments for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 (dollars in millions):

D&S East

Results for the Three Months Ended ~~June~~September 30, 2020 and 2019


		Three Months Ended								Current Quarter vs. Prior Year Quarter									Three Months Ended				Current Quarter vs. Prior Year Quarter
		June 30, 2020			June 30, 2019			Variance ($)		Variance (%)			September 30, 2020			September 30, 2019			Variance ($)		Variance (%)
Sales	Sales	$	79.7		$	77.7		$	2.0	2.6	%	Sales	$	85.1		$	70.4		$	14.7	20.9	%
Gross Profit	Gross Profit	15.0			11.1			3.9		35.1	%	Gross Profit	19.6			16.3			3.3		20.2	%
Gross Profit Margin	Gross Profit Margin	18.8		%	14.3		%					Gross Profit Margin	23.0		%	23.2		%
SG&A Expenses	SG&A Expenses	$	6.1		$	7.8		$	(1.7)	(21.8)	%	SG&A Expenses	$	8.8		$	8.8		$	—	—	%
SG&A Expenses (% of Sales)	SG&A Expenses (% of Sales)	7.7		%	10.0		%					SG&A Expenses (% of Sales)	10.3		%	12.5		%
Operating Income	Operating Income	$	8.1		$	1.9		$	6.2	326.3	%	Operating Income	$	9.9		$	7.1		$	2.8	39.4	%
Operating Margin	Operating Margin	10.2		%	2.4		%					Operating Margin	11.6		%	10.1		%

For the ~~second~~third quarter of 2020, D&S East segment sales increased as compared to the same quarter in 2019. Sales of ~~mobiles and~~mobile equipment, engineered systems and tanks and HLNG vehicle tanks were favorable during the period. In particular, sales of mobile equipment improved by approximately $7.4 million in Asia ~~were favorable, slightly offset by lower sales of standard tanks~~as order activity increased in late 2019 and ~~trailers~~continued in ~~Europe due to COVID-19 related temporary shutdowns.~~2020.

During the ~~second~~third quarter of 2020, D&S East segment gross profit increased by ~~$3.9~~$3.3 million as compared to the same quarter in 2019, and the related margin percentage ~~increased~~decreased by ~~4.5 percentage~~20 basis points. This increase in gross profit was mainly attributable to ~~the closing of our China LNG vehicle tank line facility that drove higher restructuring costs in the second quarter of 2019 that did not reoccur in 2020 and~~ favorable volume, particularly in Asia, ~~offset by unfavorable volume in Europe. The increase~~while the decrease in the related margin percentage was primarily driven by ~~favorable product mix in Asia and Europe, offset by unfavorable foreign currency exchange rates.~~regional mix.

D&S East segment SG&A expenses ~~decreased~~were flat to ~~$6.1 million for the second quarter of 2020 as compared to $7.8 million for~~ the same quarter in 2019. D&S East segment SG&A expenses as a percentage of D&S East segment sales improved to 10.3% for the third quarter of 2020 from 12.5% for the third quarter of 2019 ~~primarily driven by~~mainly as a ~~$2.6 million gain on sale~~result of ~~a facility in China, partially offset by higher payroll expenses.~~increased sales during the third quarter of 2020.

Results for the ~~Six~~Nine Months Ended ~~June~~September 30, 2020 and 2019


		Six Months Ended								Current Year-to-date vs. Prior Year-to-date Period									Nine Months Ended				Current Year-to-date vs. Prior Year-to-date Period
		June 30, 2020			June 30, 2019			Variance ($)		Variance (%)			September 30, 2020			September 30, 2019			Variance ($)		Variance (%)
Sales	Sales	$	149.7		$	146.4		$	3.3	2.3	%	Sales	$	234.8		$	216.8		$	18.0	8.3	%
Gross Profit	Gross Profit	32.1			20.0			12.1		60.5	%	Gross Profit	51.7			36.7			15.0		40.9	%
Gross Profit Margin	Gross Profit Margin	21.4		%	13.7		%					Gross Profit Margin	22.0		%	16.9		%
SG&A Expenses	SG&A Expenses	$	15.5		$	17.7		$	(2.2)	(12.4)	%	SG&A Expenses	$	24.4		$	26.5		$	(2.1)	(7.9)	%
SG&A Expenses (% of Sales)	SG&A Expenses (% of Sales)	10.4		%	12.1		%					SG&A Expenses (% of Sales)	10.4		%	12.2		%
Operating Income (Loss)		$	15.0		$	(0.4)		$	15.4	100.0	%
Operating Income												Operating Income	$	24.9		$	7.1		$	17.8	250.7	%
Operating Margin	Operating Margin	10.0		%	(0.3)		%					Operating Margin	10.6		%	3.3		%

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For the first ~~half~~nine months of 2020, D&S East segment sales increased ~~slightly~~ as compared to the same period in 2019 due to increased sales of mobile equipment and engineered ~~systems, trailers~~tanks and ~~packaged gas tanks in Europe; sales~~systems in Asia ~~were flat.~~and Europe.

During the first ~~half~~nine months of 2020, D&S East segment gross profit increased by ~~$12.1~~$15.0 million as compared to the same period in 2019, and the related margin percentage increased by ~~7.8 percentage~~510 basis points. This increase in gross profit was mainly attributable to higher volume, and costs related to the closing of our China brazed aluminum heat exchanger and LNG vehicle tank facilities that drove higher restructuring costs in the first ~~half~~nine months of 2019. The increase in the related margin percentage was primarily driven by restructuring costs in the first nine months of 2019 and favorable product mix ~~in Europe offset by unfavorable foreign currency exchange rates.~~

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as the D&S East segment gained better leverage on increased volume.

D&S East segment SG&A expenses decreased by ~~$2.2~~$2.1 million during the first ~~half~~nine months of 2020 as compared to the same period in 2019, primarily driven by a $2.6 million gain on sale of a facility in China ~~as noted above in~~during the ~~quarter to date discussion.~~first nine months of 2020.

D&S West

Results for the Three Months Ended ~~June~~September 30, 2020 and 2019


		Three Months Ended								Current Quarter vs. Prior Year Quarter									Three Months Ended				Current Quarter vs. Prior Year Quarter
		June 30, 2020			June 30, 2019			Variance ($)		Variance (%)			September 30, 2020			September 30, 2019			Variance ($)		Variance (%)
Sales	Sales	$	106.8		$	115.7		$	(8.9)	(7.7)	%	Sales	$	91.1		$	93.3		$	(2.2)	(2.4)	%
Gross Profit	Gross Profit	38.8			42.6			(3.8)		(8.9)	%	Gross Profit	28.5			29.2			(0.7)		(2.4)	%
Gross Profit Margin	Gross Profit Margin	36.3		%	36.8		%					Gross Profit Margin	31.3		%	31.3		%
SG&A Expenses	SG&A Expenses	$	9.8		$	12.7		$	(2.9)	(22.8)	%	SG&A Expenses	$	7.7		$	10.2		$	(2.5)	(24.5)	%
SG&A Expenses (% of Sales)	SG&A Expenses (% of Sales)	9.2		%	11.0		%					SG&A Expenses (% of Sales)	8.5		%	10.9		%
Operating Income	Operating Income	$	27.8		$	28.7		$	(0.9)	(3.1)	%	Operating Income	$	19.7		$	17.8		$	1.9	10.7	%
Operating Margin	Operating Margin	26.0		%	24.8		%					Operating Margin	21.6		%	19.1		%

D&S West segment sales decreased during the ~~second~~third quarter of 2020 as compared to the same quarter in ~~2019~~2019. This decrease was primarily ~~due to the timing of revenue recognition relative to certain of our LNG products where certain of our large customers shut down production temporarily due to the COVID-19 pandemic,~~driven by a decrease in engineered systems and Microbulk systems sales partially offset by an increase in ~~our engineered systems.~~sales within LNG applications.

D&S West segment gross profit decreased during the ~~second~~third quarter of 2020 as compared to the same quarter in 2019 primarily due to lower volume. The related margin decreased ~~slightly~~ driven by ~~lower volumes and unfavorable rates on certain raw materials.~~product mix.

D&S West segment SG&A expenses decreased during the ~~second~~third quarter of 2020 as compared to the same quarter in 2019 primarily driven by ~~general reductions across most SG&A categories. D&S West segment restructuring costs were $0.2~~lower employee-related expenses and ~~$0.1 for the three months ended June 30, 2020~~travel and ~~2019, respectively.~~entertainment expenses.

Results for the ~~Six~~Nine Months Ended ~~June~~September 30, 2020 and 2019


		Six Months Ended								Current Year-to-date vs. Prior Year-to-date Period									Nine Months Ended				Current Year-to-date vs. Prior Year-to-date Period
		June 30, 2020			June 30, 2019			Variance ($)		Variance (%)			September 30, 2020			September 30, 2019			Variance ($)		Variance (%)
Sales	Sales	$	218.4		$	233.7		$	(15.3)	(6.5)	%	Sales	$	269.5		$	280.0		$	(10.5)	(3.8)	%
Gross Profit	Gross Profit	77.5			82.6			(5.1)		(6.2)	%	Gross Profit	87.8			88.8			(1.0)		(1.1)	%
Gross Profit Margin	Gross Profit Margin	35.5		%	35.3		%					Gross Profit Margin	32.6		%	31.7		%
SG&A Expenses	SG&A Expenses	$	20.8		$	26.0		$	(5.2)	(20.0)	%	SG&A Expenses	$	25.6		$	32.4		$	(6.8)	(21.0)	%
SG&A Expenses (% of Sales)	SG&A Expenses (% of Sales)	9.5		%	11.1		%					SG&A Expenses (% of Sales)	9.5		%	11.6		%
Operating Income	Operating Income	$	54.3		$	54.3		$	—	—	%	Operating Income	$	58.7		$	52.9		$	5.8	11.0	%
Operating Margin	Operating Margin	24.9		%	23.2		%					Operating Margin	21.8		%	18.9		%

D&S West segment sales decreased during the first ~~half~~nine months of 2020 as compared to the same period in 2019 primarily due to ~~the timing of revenue recognition relative to certain of our LNG products~~a decrease in HLNG vehicle tanks, packaged gas industrial applications and vaporizers. This decrease was partially driven by business disruptions where certain of our large customers shut down production temporarily due to the COVID-19 pandemic ~~partially offset by an increase~~earlier in ~~our engineered systems.~~the year.

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D&S West segment gross profit decreased during the first ~~half~~nine months of 2020 as compared to the same period in 2019 primarily due to lower volume, while the related margin improvement was primarily driven by ~~our parts~~improved cost efficiency in industrial gas and ~~repairs services~~HLNG vehicle tanks and ~~industrial gas.~~warranty and freight across divisions.

~~Similar to the quarter to date discussion above,~~ D&S West segment SG&A expenses decreased during the first ~~half~~nine months of 2020 as compared to the same period in 2019 primarily driven by general reductions across most SG&A categories. ~~D&S West segment restructuring costs were $1.0 and $0.4 for the six months ended June 30, 2020 and 2019, respectively.~~

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E&C Cryogenics

Results for the Three Months Ended ~~June~~September 30, 2020 and 2019


		Three Months Ended								Current Quarter vs. Prior Year Quarter									Three Months Ended				Current Quarter vs. Prior Year Quarter
		June 30, 2020			June 30, 2019			Variance ($)		Variance (%)			September 30, 2020			September 30, 2019			Variance ($)		Variance (%)
Sales	Sales	$	63.7		$	47.6		$	16.1	33.8	%	Sales	$	64.8		$	48.9		$	15.9	32.5	%
Gross Profit	Gross Profit	21.4			10.3			11.1		107.8	%	Gross Profit	21.3			7.9			13.4		169.6	%
Gross Profit Margin	Gross Profit Margin	33.6		%	21.6		%					Gross Profit Margin	32.9		%	16.2		%
SG&A Expenses	SG&A Expenses	$	6.3		$	8.5		$	(2.2)	(25.9)	%	SG&A Expenses	$	4.8		$	5.1		$	(0.3)	(5.9)	%
SG&A Expenses (% of Sales)	SG&A Expenses (% of Sales)	9.9		%	17.9		%					SG&A Expenses (% of Sales)	7.4		%	10.4		%
Operating Income	Operating Income	$	14.3		$	—		$	14.3	100.0		Operating Income	$	15.6		$	3.6		$	12.0	333.3	%
Operating Margin	Operating Margin	22.4		%	—		%					Operating Margin	24.1		%	7.4		%

For the ~~second~~third quarter of 2020, E&C Cryogenics segment sales increased as compared to the same quarter in 2019. The increase in sales is primarily related to revenue contributions from ~~big LNG, including~~the continued execution of our backlog on Venture Global’s Calcasieu Pass LNG export terminal project.

~~For~~During the ~~second~~third quarter of 2020, E&C Cryogenics segment gross profit increased by ~~$11.1~~$13.4 million as compared to the same quarter in 2019. The increase in gross profit and the related increase in margin was mainly driven by volume in Venture Global’s Calcasieu Pass LNG export terminal project and high margin, short-lead time replacement equipment.

E&C Cryogenics segment SG&A expenses decreased during the ~~second~~third quarter of 2020 as compared to the same quarter in 2019 primarily driven by ~~general reductions~~cost reduction efforts across most ~~SG&A~~ categories. ~~E&C Cryogenics segment restructuring costs/(credits) were $0.4 and $(1.2) for the three months ended June 30, 2020 and 2019, respectively.~~

Results for the ~~Six~~Nine Months Ended ~~June~~September 30, 2020 and 2019


		Six Months Ended								Current Year-to-date vs. Prior Year-to-date Period									Nine Months Ended				Current Year-to-date vs. Prior Year-to-date Period
		June 30, 2020			June 30, 2019			Variance ($)		Variance (%)			September 30, 2020			September 30, 2019			Variance ($)		Variance (%)
Sales	Sales	$	125.9		$	82.7		$	43.2	52.2	%	Sales	$	190.7		$	131.3		$	59.4	45.2	%
Gross Profit	Gross Profit	37.5			10.4			27.1		260.6	%	Gross Profit	58.8			18.3			40.5		221.3	%
Gross Profit Margin	Gross Profit Margin	29.8		%	12.6		%					Gross Profit Margin	30.8		%	13.9		%
SG&A Expenses	SG&A Expenses	$	12.8		$	17.5		$	(4.7)	(26.9)	%	SG&A Expenses	$	17.6		$	22.6		$	(5.0)	(22.1)	%
SG&A Expenses (% of Sales)	SG&A Expenses (% of Sales)	10.2		%	21.2		%					SG&A Expenses (% of Sales)	9.2		%	17.2		%
Operating Income (Loss)	Operating Income (Loss)	$	23.0		$	(10.7)		$	33.7	100.0		Operating Income (Loss)	$	38.6		$	(7.1)		$	45.7	100.0	%
Operating Margin	Operating Margin	18.3		%	(12.9)		%					Operating Margin	20.2		%	(5.4)		%

For the first ~~half~~nine months of 2020, E&C Cryogenics segment sales increased as compared to the same period in 2019. The increase in sales is primarily related to revenue contributions from the continued execution of our backlog on big LNG, including Venture Global’s Calcasieu Pass LNG export terminal project and other petrochemical applications.

For the first ~~half~~nine months of 2020, E&C Cryogenics segment gross profit increased by ~~$27.1~~$40.5 million as compared to the same period in 2019. The increase in gross profit and the related margin was mainly driven by volume in Venture Global’s Calcasieu Pass LNG export terminal project and high margin, short-lead time replacement equipment.

E&C Cryogenics segment SG&A expenses decreased during the first ~~half~~nine months of 2020 as compared to the same period in 2019 primarily driven by general reductions across most SG&A categories, especially employee-related costs in light of restructuring actions taken during the period. E&C Cryogenics segment restructuring costs were $0.8 million and ~~$2.2~~$2.4 million for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively.

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E&C FinFans

Results for the Three Months Ended ~~June~~September 30, 2020 and 2019


		Three Months Ended								Current Year-to-date vs. Prior Year-to-date Period									Three Months Ended				Current Year-to-date vs. Prior Year-to-date Period
		June 30, 2020			June 30, 2019			Variance ($)		Variance (%)			September 30, 2020			September 30, 2019			Variance ($)		Variance (%)
Sales	Sales	$	64.1		$	72.6		$	(8.5)	(11.7)	%	Sales	$	40.5		$	128.6		$	(88.1)	(68.5)	%
Gross Profit	Gross Profit	17.2			20.2			(3.0)		(14.9)	%	Gross Profit	9.2			39.8			(30.6)		(76.9)	%
Gross Profit Margin	Gross Profit Margin	26.8		%	27.8		%					Gross Profit Margin	22.7		%	30.9		%
SG&A Expenses	SG&A Expenses	$	6.2		$	7.1		$	(0.9)	(12.7)	%	SG&A Expenses	$	4.4		$	10.7		$	(6.3)	(58.9)	%
SG&A Expenses (% of Sales)	SG&A Expenses (% of Sales)	9.7		%	9.8		%					SG&A Expenses (% of Sales)	10.9		%	8.3		%
Operating (Loss) Income	Operating (Loss) Income	$	(0.2)		$	10.2		$	(10.4)	(102.0)	%	Operating (Loss) Income	$	(1.7)		$	16.2		$	(17.9)	(110.5)	%
Operating Margin	Operating Margin	(0.3)		%	14.0		%					Operating Margin	(4.2)		%	12.6		%

For the ~~second~~third quarter of 2020, E&C FinFans segment sales decreased as compared to the same quarter in 2019 primarily due to an industry-wide softness in demand for midstream and upstream compression equipment. ~~Excluding the impact of AXC, sales decreased by $32.2 million, or 44.4%.~~ As of the beginning of 2020, our previous air cooled heat exchanger facility in Tulsa was closed, and its operations were combined with our AXC operations.

~~For~~During the ~~second~~third quarter of 2020, E&C FinFans segment gross profit decreased by ~~$3.0 (decreased by $7.4~~$30.6 million ~~organically)~~ as compared to the same quarter in 2019 mainly ~~due to~~ driven by lower volume and restructuring ~~costs.~~costs and other one-time costs of $1.6 million. E&C FinFans segment gross profit as a percentage of E&C FinFans segment sales ~~excluding AXC’s gross profit of $4.4 million,~~ was ~~31.7%~~22.7% as compared to ~~27.8%~~30.9% in the ~~first~~third quarter of 2019, which is ~~an improvement~~a decline of ~~3.9 percentage~~820 basis points on a quarter over prior year quarter basis primarily due to ~~cost structure changes.~~one-time costs incurred and lower volume.

E&C FinFans segment SG&A expenses decreased during the ~~second~~third quarter of 2020 as compared to the same quarter in 2019 primarily driven by ~~the AXC acquisition, which added SG&A expenses of $1.3 million offset by lower employee-related costs.~~cost reduction efforts across most categories due to market conditions in 2020.

Results for the ~~Six~~Nine Months Ended ~~June~~September 30, 2020 and 2019


		Six Months Ended								Current Year-to-date vs. Prior Year-to-date Period									Nine Months Ended				Current Year-to-date vs. Prior Year-to-date Period
		June 30, 2020			June 30, 2019			Variance ($)		Variance (%)			September 30, 2020			September 30, 2019			Variance ($)		Variance (%)
Sales	Sales	$	144.8		$	143.1		$	1.7	1.2	%	Sales	$	185.3		$	272.0		$	(86.7)	(31.9)	%
Gross Profit	Gross Profit	36.7			39.4			(2.7)		(6.9)	%	Gross Profit	45.9			79.4			(33.5)		(42.2)	%
Gross Profit Margin	Gross Profit Margin	25.3		%	27.5		%					Gross Profit Margin	24.8		%	29.2		%
SG&A Expenses	SG&A Expenses	$	13.5		$	13.9		$	(0.4)	(2.9)	%	SG&A Expenses	$	17.9		$	24.6		$	(6.7)	(27.2)	%
SG&A Expenses (% of Sales)	SG&A Expenses (% of Sales)	9.3		%	9.7		%					SG&A Expenses (% of Sales)	9.7		%	9.0		%
Operating Income		$	0.9		$	19.6		$	(18.7)	(95.4)	%
Operating (Loss) Income												Operating (Loss) Income	$	(0.8)		$	36.0		$	(36.8)	(102.2)	%
Operating Margin	Operating Margin	0.6		%	13.7		%					Operating Margin	(0.4)		%	13.2		%

For the first ~~half~~nine months of 2020, E&C FinFans segment sales ~~increased~~decreased as compared to the same period in ~~2019 primarily due to the AXC acquisition.~~2019. Excluding the impact of AXC, sales decreased by ~~$56.9~~$97.9 million, or ~~39.8%~~46.2%, mainly due to an industry-wide softness in demand for midstream and upstream compression equipment. As noted above in the quarter to date discussion, as of the beginning of 2020, our previous air cooled heat exchanger facility in Tulsa was closed, and its operations were combined with our AXC operations.

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For the first ~~half~~nine months of 2020, E&C FinFans segment gross profit decreased by ~~$2.7~~$33.5 million (decreased by $~~12.0~~23.8 million organically) as compared to the same period in 2019. E&C FinFans segment gross profit as a percentage of E&C FinFans segment sales, excluding AXC’s gross profit of $~~9.3~~8.0 million, was ~~31.8%~~33.2% as compared to ~~27.5%~~29.1% in the first ~~half~~nine months of 2019, which is ~~an improvement~~a decline of ~~4.3 percentage~~410 basis points on a quarter over prior year quarter basis primarily due to ~~cost structure changes.~~lower volume and higher restructuring costs as further explained below.

Restructuring costs for the E&C FinFans segment were $6.0 million ($4.1 million - Cost of sales, $1.9 million - SG&A) for the nine months ended September 30, 2020 as compared to $1.8 million ($1.6 million - Cost of sales, $0.2 million - SG&A) for the nine months ended September 30, 2019. Restructuring costs for the first nine months of 2020 mainly consisted of severance costs associated with the announced closure of our E&C FinFans air cooled heat exchanger leased facility in Tulsa, Oklahoma and consolidation of its operations into our Beasley, Texas location at which we own 260 acres of land. This closure is a cost reduction measure within E&C FinFans to structure the business for profitable growth in equipment for midstream and upstream energy applications.

E&C FinFans segment SG&A expenses decreased during the first ~~half~~nine months of 2020 as compared to the same period in 2019 primarily driven by ~~the AXC acquisition, which added SG&A expenses of $3.8 million~~cost reduction efforts across most categories due to market conditions in 2020, partially offset by ~~lower employee-related~~higher restructuring costs.

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Corporate

Corporate SG&A expenses ~~increased~~decreased in the ~~second~~third quarter of 2020 as compared to the same quarter in 2019 by ~~$2.5~~$5.5 million primarily due to ~~higher restructuring~~lower transaction-related costs ~~telecommunications~~ and ~~information technology equipment costs, partially offset by lower travel and entertainment expenses and transaction-related~~employee-related costs. Corporate SG&A expenses increased by ~~$5.9~~$0.4 million during the first ~~half~~nine months of 2020 as compared to the same period in 2019 primarily due to higher telecommunications and information technology equipment costs, restructuring ~~costs, and employee-related~~ costs partially offset by lower transaction-related costs.

Liquidity and Capital Resources

Debt Instruments and Related Covenants

Our debt instruments and related covenants are described in Note 8,9, “Debt and Credit Arrangements” to our unaudited condensed consolidated financial statements included under Item 1, “Financial Statements” in this report.

Sources and Use of Cash

Our cash and cash equivalents totaled ~~$122.5~~$120.7 million at ~~June~~September 30, 2020, an increase of ~~$3.5~~$1.7 million from the balance at December 31, 2019. Our foreign subsidiaries held cash of approximately ~~$91.6~~$107.5 million and ~~$75.9~~$64.2 million, at ~~June~~September 30, 2020, and December 31, 2019, respectively, to meet their liquidity needs. No material restrictions exist to accessing cash held by our foreign subsidiaries. We expect to meet our U.S. funding needs without repatriating non-U.S. cash and incurring incremental U.S. taxes. Cash equivalents are primarily invested in money market funds that invest in high quality, short-term instruments, such as U.S. government obligations, certificates of deposit, repurchase obligations, and commercial paper issued by corporations that have been highly rated by at least one nationally recognized rating organization, and in the case of cash equivalents in China, obligations of local banks. We believe that our existing cash and cash equivalents, funds available under our senior secured revolving credit facility due June 2024 (“SSRCF”) or other financing alternatives, and cash provided by operations will be sufficient to meet our normal working capital needs, capital expenditures and prioritize the pay down of debt for the foreseeable future.

Cash provided by operating activities was ~~$80.3~~$94.2 million for the ~~six~~nine months ended ~~June~~September 30, 2020, an increase of ~~$80.7~~$58.4 million compared to cash ~~used in~~provided by operating activities of ~~$0.4~~$35.8 million for the ~~six~~nine months ended ~~June~~September 30, 2019 primarily due to higher net income and an increase in operating cash provided by working capital in the first ~~half~~nine months of 2020.

Cash used in investing activities was ~~$20.2~~$19.0 million and ~~$19.5~~$632.7 million for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2020, we paid approximately ~~$21.0~~$26.9 million for capital expenditures as compared to ~~$15.1~~$26.0 million for the ~~six~~nine months ended ~~June~~September 30, 2019. During the nine months ended September 30, 2019, we used approximately $600 million for the acquisition of AXC with proceeds from a common stock offering and borrowings under our SSRCF and term loan due June 2024.

Cash used in financing activities was ~~$53.8~~$98.8 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to cash provided by financing activities of ~~$50.9~~$547.2 million for the ~~six~~nine months ended ~~June~~September 30, 2019. During the ~~six~~nine months ended ~~June~~September 30, 2020, we borrowed ~~$93.5~~$94.5 million on credit facilities ~~to fund working capital needs and to fund our share repurchase program~~ and repaid ~~$121.4~~$167.1 million in borrowings on credit facilities. We used $19.3 million to repurchase shares of Chart common stock related to our share purchase program during the ~~six~~

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nine months ended ~~June~~September 30, 2020. 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. During the ~~six~~nine months ended ~~June~~September 30, 2019, we ~~raised $295.8 million in cash from the issuance of shares,~~ borrowed ~~$52.0~~$202.6 million on ~~credit facilities mainly~~our SSRCF to fund working capital needs and to fund a portion of the AXC acquisition and repaid ~~$291.3~~$384.2 million in ~~borrowings~~SSRCF borrowings. We also borrowed $450.0 million under a term loan on ~~credit facilities.~~July 1, 2019 and received proceeds of $295.8 million from the issuance of shares in connection with the closing of the AXC acquisition.

Sources and Use of Cash (Subsequent Events)

Subsequent to the end of the third quarter of 2020, on October 1, 2020, we closed on the sale of the assets of the cryobiological products business within our D&S West segment to Cryoport, Inc. for net cash proceeds of $317.1 million, inclusive of the base purchase price of $320.0 million less estimated closing date adjustments of $2.9 million. On October 2, 2020, we used proceeds from the Divestiture and other available cash on hand to pay down $335.7 million of our term loan due 2024. Refer to Note 2, “Discontinued Operations” for further information regarding the Divestiture.

On October 14, 2020, McPhy (Euronext Paris: MCPHY – ISIN; FR0011742329), specialized in zero-carbon hydrogen production and distribution equipment, completed a capital increase for the amount of 180 million euros. Chart subscribed to 1,276,595 shares for 30 million euros (equivalent to $35.3 million), and we now hold 4.6% of the capital of McPhy post-offering. In conjunction with our strategic investment, Chart and McPhy also executed a commercial Memorandum of Understanding (“MOU”). The MOU between McPhy and Chart is intended to set the pace of commercial collaboration to stimulate new hydrogen demand for the parties’ respective equipment and solutions globally.

Cash Requirements

We do not currently anticipate any unusual cash requirements for working capital needs for the year ending December 31, 2020. Management anticipates we will be able to satisfy cash requirements for our ongoing business for the foreseeable future with cash generated by operations, existing cash balances and available borrowings under our credit facilities. Capital expenditures for the remaining ~~six~~three months of 2020 is expected to be in the range of ~~$10~~$5 million to ~~$15~~$10 million.

Orders and Backlog

We consider orders to be those for which we have received a firm signed purchase order or other written contractual commitments from the customer. Backlog is comprised of the portion of firm signed purchase orders or other written contractual commitments from customers for which work has not been performed, or is partially completed, that we have not recognized as revenue and excludes unexercised contract options and potential orders. Our backlog as of ~~June~~September 30, 2020 was ~~$697.3~~$684.9 million, inclusive of $46.4 million of backlog remaining on Calcasieu Pass, compared to ~~$752.8~~$745.2 million, asinclusive of ~~June 30, 2019 which included~~ $135 ~~million of Venture Global’s Calcasieu~~

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~~Pass big LNG orders. As of the end of the second quarter of 2020, there was $72.0~~ million of Calcasieu Pass ~~backlog remaining. When removing that,~~orders as of September 30, 2019. Excluding Calcasieu Pass, backlog increased by $28.3 million or 4.6% in the current quarter compared to the prior year quarter.

The tables below represent orders received and backlog by segment for the periods indicated (dollars in millions):


		Three Months Ended											Three Months Ended
		June 30, 2020		June 30, 2019		March 31, 2020			September 30, 2020		September 30, 2019		June 30, 2020
Orders	Orders							Orders
D&S East	D&S East	$	67.9	$	78.8	$	70.4	D&S East	$	87.1	$	76.5	$	67.9
D&S West	D&S West	114.6		115.8		117.9		D&S West	126.0		91.3		91.7
E&C Cryogenics	E&C Cryogenics	47.2		49.6		51.2		E&C Cryogenics	34.5		35.1		47.2
E&C FinFans	E&C FinFans	37.6		77.8		69.1		E&C FinFans	34.1		63.0		37.6
Intersegment eliminations	Intersegment eliminations	0.3		—		(4.3)		Intersegment eliminations	(19.0)		—		0.3
Consolidated	Consolidated	$	267.6	$	322.0	$	304.3	Consolidated	$	262.7	$	265.9	$	244.7

As of
June 30,
2020 June 30,
2019 March 31,
2020
Backlog
D&S East $ 218.2 $ 203.4 $ 221.0
D&S West 157.3 130.1 150.9
E&C Cryogenics 257.3 301.9 273.2
E&C FinFans 68.3 117.4 94.7
Intersegment eliminations (3.8) — (7.3)
Consolidated $ 697.3 $ 752.8 $ 732.5

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	As of
	September 30, 2020		September 30, 2019		June 30, 2020
Backlog
D&S East	$	229.0	$	203.8	$	218.2
D&S West	179.7		116.7		145.8
E&C Cryogenics	228.8		288.3		257.3
E&C FinFans	62.0		136.4		68.3
Intersegment eliminations	(14.6)		—		(3.8)
Consolidated	$	684.9	$	745.2	$	685.8

D&S East segment orders for the three months ended ~~June~~September 30, 2020 were ~~$67.9~~$87.1 million compared to ~~$78.8~~$76.5 million for the three months ended September 30, 2019 and $67.9 million for the three months ended June 30, ~~2019 and $70.4 million for the three months ended March 31,~~ 2020. The ~~decrease~~increase in D&S East segment orders during the three months ended ~~June~~September 30, 2020 when compared to the same quarter last year was primarily driven by ~~unfavorable~~solid order intake for mobile equipment ~~orders~~ in ~~Europe, which had previously been strong for the past eighteen months,~~China and India, favorable HLNG in Italy, and favorable parts and service in Europe; partially offset by ~~favorable bulk tanks~~unfavorable orders for mobile equipment in ~~Asia.~~Europe. The ~~decrease~~increase from the ~~first~~second quarter of 2020 was mainly due to ~~unfavorable engineered systems~~strong order volume for mobile equipment in China and ~~tanks mainly sold through our~~India, favorable HLNG in Italy, and favorable parts and services in Europe. Orders in VRV India ~~location; partially offset by increases~~were negatively impacted in ~~bulk tanks~~the prior quarter due to COVID-19 shut downs, but increased this quarter as restrictions eased and ~~packaged gas~~demand for medical oxygen increased in ~~Asia and engineered tanks in Europe.~~the region. D&S East segment backlog at ~~June~~September 30, 2020 totaled ~~$218.2~~$229.0 million and is a record high compared to ~~$203.4~~$203.8 million as of September 30, 2019 and $218.2 million as of June 30, ~~2019 and $221.0 million as of March 31,~~ 2020.

D&S West segment orders for the three months ended ~~June~~September 30, 2020 were ~~$114.6~~$126.0 million compared to ~~$115.8~~$91.3 million for the three months ended September 30, 2019, and $91.7 million for the three months ended June 30, ~~2019, and $117.9 million for~~2020. The increase in D&S West segment orders during the three months ended ~~March 31, 2020. Orders for~~September 30, 2020 when compared to the same quarter last year was primarily driven by our leasing business, HLNG vehicle tanks ~~for over the road trucking were a record (greater than $25 million) in~~and engineered systems. The increase from the second quarter of 2020 ~~as the clean energy infrastructure build out continues globally. In~~was mainly due to leasing business and engineered systems. D&S West ~~the second quarter~~segment backlog ~~of $157.3~~at September 30, 2020 totaled $179.7 million and is the highest in the history of the business; up ~~20.9%~~54.0% over the ~~second~~third quarter of 2019 and ~~4.2%~~23.3% over the ~~first~~second quarter of 2020, which was then a record.

E&C Cryogenics segment orders for the three months ended ~~June~~September 30, 2020 were ~~$47.2~~ $34.5 million compared to ~~$49.6~~$35.1 million for the three months ended September 30, 2019 and $47.2 million for the three months ended June 30, ~~2019 and $51.2 million for~~2020. Orders in the ~~three months ended March 31, 2020. Orders in~~third quarter of 2020 were stable as the replacement business continues to be robust. The decrease from the second quarter of 2020 ~~included~~was mainly due to a small scale LNG order of $13.3 million ~~small-scale LNG order for a U.S. utility customer.~~ that was recorded in the second quarter and normal fluctuations of timing of larger liquefaction project orders. E&C Cryogenics segment backlog totaled ~~$257.3~~$228.8 million as of ~~June~~September 30, 2020, compared to ~~$301.9~~$288.3 million as of ~~June~~September 30, 2019 and ~~$273.2~~$257.3 million as of March 31, 2020. E&C Cryogenics segment backlog included a $135 million order for cold box and brazed aluminum heat exchanger equipment content on Venture Global’s Calcasieu Pass liquefied natural gas (LNG) export terminal project for all periods presented. As mentioned above, there was $72.0 million of Calcasieu Pass backlog remaining as of June 30, 2020. Excluding Calcasieu Pass backlog, E&C Cryogenics segment backlog ~~increased~~decreased by ~~2.8%~~1.6% in the current quarter over the prior quarter, ~~and 11.0%~~but increased 19.0% in the current quarter over the prior year quarter. Included in E&C Cryogenics segment backlog for all periods presented is approximately $40.0 million related to the previously announced Magnolia LNG order where production release is delayed until later in 2021.

E&C FinFans segment orders for the three months ended ~~June~~September 30, 2020 were ~~$37.6~~$34.1 million compared to ~~$77.8~~$63.0 million for the three months ended September 30, 2019 and $37.6 million for the three months ended June 30, ~~2019 and $69.1 million for~~2020. The decrease in E&C FinFans segment orders during the three months ended ~~March 31, 2020. E&C FinFans segment orders included $11.3 million and $39.7 million in orders related to AXC for the three months ended June~~September 30, 2020 ~~and March 31, 2020, respectively. Excluding~~when compared to the ~~impact of AXC, orders decreased~~ same quarter last year was primarily due to softness in demand for natural gas

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compression equipment. ~~As previously mentioned in the segment results section, as of the beginning of 2020, our previous air cooled heat exchanger facility in Tulsa was closed, and its operations were combined with our AXC operations.~~ E&C FinFans segment backlog totaled $62.0 million as of September 30, 2020, compared to $136.4 million as of September 30, 2019 and $68.3 million as of June 30, ~~2020, compared to $117.4 million as of June 30, 2019 and $94.7 million as of March 31,~~ 2020. ~~E&C FinFans backlog as of June 30, 2020 includes $24.3 million related to AXC.~~

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements.

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Application of Critical Accounting Policies

Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles. As such, some accounting policies have a significant impact on amounts reported in these unaudited condensed consolidated financial statements. A summary of those significant accounting policies can be found in our Annual Report on Form 10-K for the year ended December 31, 2019. In particular, judgment is used in areas such as revenue from contracts with customers, goodwill, indefinite-lived intangibles, long-lived assets (including finite-lived intangible assets), product warranty costs, and pensions. There have been no significant changes to our critical accounting policies since December 31, 2019.

Forward-Looking Statements

We are making this statement in order to satisfy the “safe harbor” provisions contained in the Private Securities Litigation Reform Act of 1995. This Quarterly Report on Form 10-Q includes “forward-looking statements.” These forward-looking statements include statements concerning the Company’s business plans, including statements regarding completed acquisitions and divestitures, cost synergies and efficiency savings, objectives, future orders, revenues, margins, earnings or performance, liquidity and cash flow, capital expenditures, business trends, governmental initiatives, including executive orders and other information that is not historical in nature. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “anticipates,” “believes,” “projects,” “forecasts,” “outlook,” “guidance,” “continue,” “target,” or the negative of such terms or comparable terminology.

Forward-looking statements contained herein (including future cash contractual obligations, liquidity, cash flow, orders, results of operations, projected revenues, margins, capital expenditures, industry and business trends, cost synergies and savings objectives and government initiatives, among other matters) or in other statements made by us are made based on management’s expectations and beliefs concerning future events impacting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause the Company’s actual results to differ materially from those expressed or implied by forward-looking statements made by us or on our behalf. These include: the other factors discussed in Item 1A. “Risk Factors” and the factors discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2019, which should be reviewed carefully; risks relating to the recent outbreak and continued uncertainty associated with the coronavirus (COVID-19); Chart’s ability to successfully integrate recent acquisitions, and achieve the anticipated revenue, earnings, accretion and other benefits from these acquisitions; estimated segment revenues, future revenue, earnings, cash flows and margin targets and run rates. These factors should not be construed as exhaustive and there may also be other risks that we are unable to predict at this time.

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this Quarterly Report and are expressly qualified in their entirety by the cautionary statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as the same may be updated from time to time. We undertake no obligation to update or revise forward-looking statements which may be made to reflect events or circumstances that arise after the filing date of this document or to reflect the occurrence of unanticipated events, except as otherwise required by law.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, our operations are exposed to fluctuations in interest rates and foreign currency values that can affect the cost of operating and financing. Accordingly, we address a portion of these risks through a program of risk management.

Interest Rate Risk: Our primary interest rate risk exposure results from the SSRCF’s various floating rate pricing mechanisms. If interest rates were to increase 200 basis points (2 percent) from the weighted-average interest rate of ~~2.50%~~2.1% at ~~June~~September 30, 2020, and assuming no changes in the ~~$95.2~~$54.4 million of borrowings outstanding under the SSRCF at ~~June~~September 30, 2020, our additional annual expense would be approximately ~~$1.9~~$1.1 million on a pre-tax basis.

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Foreign Currency Exchange Rate Risk: We operate in the United States and other foreign countries, which creates exposure to foreign currency exchange fluctuations in the normal course of business, which can impact our financial position, results of operations, cash flow, and competitive position. The financial statements of foreign subsidiaries are translated into their U.S. dollar equivalents at end-of-period exchange rates for assets and liabilities, while income and expenses are translated at average monthly exchange rates. Translation gains and losses are components of other comprehensive income as reported in the unaudited condensed consolidated statements of income and comprehensive income. Translation exposure is primarily with the euro, the Czech koruna, the Chinese yuan, and the Indian ~~rupee and the Japanese yen.~~rupee. During the ~~second~~third quarter of 2020, the U.S. dollar weakened in relation to the ~~Czech koruna~~Chinese yuan and the euro by 4% ~~and 2%~~, ~~respectively. The U.S. dollar to~~ the ~~Chinese yuan, Indian rupee~~Czech koruna by 3%, and the ~~Japanese yen did not materially change during the second quarter of 2020.~~Indian rupee. Additionally, the euro ~~weakened~~

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strengthened in relation to the Czech koruna by 2%. At ~~June~~September 30, 2020, a hypothetical 10% weakening of the U.S. dollar would not materially affect our financial statements.

Chart’s primary transaction exchange rate exposures are with the euro, the Japanese yen, the Czech koruna, the Australian dollar, the British pound, the Indian rupee, and the Chinese yuan. Transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency are recognized in the unaudited condensed consolidated statements of income and comprehensive income as a component of foreign currency (gain) loss. We enter into foreign exchange forward contracts to hedge anticipated and firmly committed foreign currency transactions. We do not use derivative financial instruments for speculative or trading purposes. The terms of the contracts are generally one year or less. At ~~June~~September 30, 2020, a hypothetical 10% weakening of the U.S. dollar would not materially affect our outstanding foreign exchange forward contracts.

Market Price Sensitive Instruments

In connection with the pricing of the 2024 Notes, we entered into privately-negotiated convertible note hedge transactions (the “Note Hedge Transactions”) with certain parties, including affiliates of the initial purchasers of the 2024 Notes (the “Option Counterparties”). These Note Hedge Transactions are expected to reduce the potential dilution upon any future conversion of the 2024 Notes.

We also entered into separate, privately-negotiated warrant transactions with the Option Counterparties to acquire up to 4.41 million shares of our common stock. The warrant transactions will have a dilutive effect with respect to our common stock to the extent that the price per share of our common stock exceeds the strike price of the warrants unless we elect, subject to certain conditions, to settle the warrants in cash. The strike price of the warrant transactions related to the 2024 Notes was initially $71.775 per share. Further information is located in Note 8,9, “Debt and Credit Arrangements” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We perform an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, such officers concluded that as of ~~June~~September 30, 2020, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act (1) is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (2) is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

As disclosed in Note ~~15,~~16, “Commitments and Contingencies”, Chart was named in lawsuits (including lawsuits 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 hereby incorporate by reference into this Item 1 the disclosure under the headings “Note ~~15,~~16, Commitments and Contingencies – Stainless Steel Cryobiological Tank Legal Proceedings.”

Although we have not completed our factual investigations into these proceedings, which remain in their early stages, we believe that we have strong factual and legal defenses to the claims and intend to vigorously assert such defenses.

Item 1A. Risk Factors

The COVID-19 pandemic has disrupted our operations and could have a material adverse effect on our business.

Our business could be materially and adversely affected by the outbreak of a widespread health epidemic. The present coronavirus (or COVID-19) pandemic has disrupted, and may again in the future, disrupt our operations and could affect our business, as government authorities impose mandatory closures, work-from-home orders and social distancing protocols or impose other currently unforeseen restrictions that could materially adversely affect our ability to adequately staff and maintain our operations. While our production has been 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. 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.

In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Item 1A. “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2019 and our Quarterly Reports for the quarters ended June 30, 2020 and March 31, 2020.

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


	~~Issuer Purchases of Equity Securities~~
~~Period~~	~~Total Number of Shares Purchased~~ ⁽¹⁾	~~Average Price Paid Per Share~~ ⁽¹⁾		~~Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs~~ ⁽²⁾	~~Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs~~ ⁽²⁾
~~April 1 - 30, 2020~~	9	$	~~32.41~~	—	$	—
~~May 1 – 31, 2020~~	~~379~~	~~36.97~~		—	—
~~June 1 – 30, 2020~~	—	—		—	—
~~Total~~	~~388~~	$	~~36.86~~	—	$	—


	Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share ⁽¹⁾		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs ⁽²⁾	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ⁽²⁾
July 1 - 31, 2020	269	$	48.32	—	$	—
August 1 – 31, 2020	60	71.10		—	—
September 1 – 30, 2020	711	71.27		—	—
Total	1,040	65.32		—	$	—

_______________

⁽¹⁾Includes shares of common stock surrendered to us during the ~~second~~third quarter of 2020 by participants under our share-based compensation plans to satisfy tax withholding obligations relating to the vesting or payment of equity awards for an aggregate purchase price of approximately ~~$14,302.~~$67,933. The total number of shares repurchased represents the net shares issued to satisfy tax withholdings. All such repurchased shares were subsequently retired during the three months ended ~~June~~September 30, 2020.

⁽²⁾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. ~~On March 20, 2020 we suspended our share repurchase program.~~ 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.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 6.Exhibits

The following exhibits are included with this report:

2.1 P urchase Agreement by and between Chart Industries, Inc. and Cryoport, Inc. dated as of August 24, 2020, (incorporated by reference to Exh i bit 2.1 to the Reg istrant ’s Current Report on Form 8-K , filed with the Securities and Exchange Commission on August 25, 2020 (File No. 001-11442)).

10.1 Amendment No. 1,2, dated as of ~~April 20,~~September 28, 2020, to the Fourth Amended and Restated Credit Agreement by and among Chart Industries, Inc., Chart Industries Luxembourg S.à r.l., Chart Asia Investment Company Limited, the other foreign borrowers from time to time party thereto, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the ~~Registrant’s~~Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on ~~April 23,~~October 1, 2020 (File No. 001-11442)).

31.1 Rule 13a-14(a) Certification of the Company’s Chief Executive Officer, President, Treasurer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer). (x)

32.1 Section 1350 Certification of the Company’s Chief Executive Officer, President, Chief Financial Officer and Treasurer (Principal Executive Officer and Principal Financial Officer). (xx)

101.INS XBRL Instance Document *

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

_______________

(x) Filed herewith.

(xx) Furnished herewith.

* The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Chart Industries, Inc.
(Registrant)


Date:	~~July 23,~~October 22, 2020	By:	/s/ Jillian C. Evanko
			Jillian C. Evanko
			Chief Executive Officer, President, Chief Financial Officer and Treasurer
			(Principal Executive Officer and Principal Financial Officer)
			(Duly Authorized Officer)

		By:	/s/ Scott W. Merkle
			Scott W. Merkle
			Vice President and Chief Accounting Officer

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