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Chart Industries (GTLS) Completes Buyout of L.A. Turbine

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Chart Industries, Inc. (GTLS - Free Report) recently announced that it acquired L.A. Turbine for $80 million in cash. Notably, shares of the company gained 2.5% in the last couple of days to eventually close the trading session at $149.91 on Friday.

Based in Valencia, CA, L.A. Turbine is a leading designer, manufacturer and supplier of application-specific turboexpander equipment. Also, the company is engaged in offering aftermarket services like repair, maintenance and spare part manufacturing services for turboexpanders.

Acquisition Rationale

The latest buyout is in sync with Chart Industries’ policy of acquiring businesses for strengthening its product offerings and customer base. Notably, the inclusion of L.A. Turbine’s robust design and engineering expertise for turboexpanders, supported by its solid manufacturing capabilities, will enable Chart Industries offer its customers a comprehensive suite of solutions in several applications. This includes hydrogen & helium liquefaction, industrial gas, carbon capture and energy storage, natural gas processing and petrochemical among others.

The acquisition will help Chart Industries gain access to the production capacity of specialized expanders. As noted, this will likely aid the company to win liquefaction projects and deliver the same in a shorter span, thus reinforcing its position in the liquefaction market. Notably, the transaction expanded Chart Industries’ total addressable market for specialty products by $350 million.

Chart Industries expects the buyout to be immediately accretive. In 2022, the company anticipates L.A. Turbine to contribute revenues worth $40-$50 million and earnings per share of 20-30 cents on about 35.5 million weighted shares outstanding.

Other Inorganic Moves

In February 2021, the company completed the acquisition of Cryogenic Gas Technologies, Inc., which has been enhancing its competency in hydrogen and helium liquefaction space ever since. In addition, it closed the buyouts of Sustainable Energy Solutions, Inc., BlueInGreen, LLC and Worthington Industries, Inc.’s (WOR - Free Report) cryogenic trailer and hydrogen trailer business in 2020. Notably, the company invested $55 million (net of cash acquired) in business acquisitions during the first three months of 2021.

Zacks Rank, Price Performance and Earnings Trend

Chart Industries with a market capitalization of $5.4 billion carries a Zacks Rank #2 (Buy), currently. The company is poised to gain from its sturdy product menu, higher orders, planned investments and cost-saving measures.

In the past three months, the stock has gained 1.7% against the industry’s decline of 0.7%.

Zacks Investment ResearchImage Source: Zacks Investment Research

The Zacks Consensus Estimate for 2021 earnings has improved 0.5% to $3.94 in the past 30 days on the back of two upward revisions with no downward movement noticed. Also, estimates for 2022 have increased 1.3% to $5.55 on four upward revisions against no southbound movement.

Other Stocks to Consider

A few other top-ranked stocks from the same space are Applied Industrial Technologies, Inc.  (AIT - Free Report) and Barnes Group Inc. (B - Free Report) , each carrying a Zacks Rank of 2, presently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Applied Industrial delivered an earnings surprise of 30.33%, on average, in the trailing four quarters.

Barnes Group delivered an earnings surprise of 19.45%, on average, in the trailing four quarters.

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