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Chart Industries on Expansion Mode, Acquires Hudson Products

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Chart Industries, Inc. (GTLS - Free Report) announced that it has acquired Hudson Products Corporation from Riverstone Holdings LLC. The buyout, originally announced in June, was completed on Sep 20 for a cash consideration of $410 million.

Hudson Products is a provider of air-cooled heat exchangers (ACHX) and axial flow cooling fans. Its premium products and services are widely used in the refining, heating, ventilation & air conditioning (HVAC), petrochemical, natural gas, power generation, industrial and commercial end markets. Notably, it derives nearly 37% of its net sales from providing aftermarket services. This North American company was founded in 1939.

Synergistic Benefits From Hudson Products Buyout

Chart Industries will integrate the acquired assets, including Hudson Products’ Fin-Fan brand, Tuf-Lite brand and other ACHXs, with its Energy & Chemicals segment. This move will enable the Energy & Chemicals segment to gain exposure in HVAC, petrochemical and power generation end markets. Also, annual revenue generation capacity from E&C LifeCycle aftermarket business will increase from $50 million to $125 million.

The company anticipates Hudson Products to add $205 million of revenue generation capacity in 2017. Also, these assets are expected to be accretive to earnings per share in 2018. Additionally, the company anticipates realizing annual cost synergies of $7 million within 18 months of deal completion.

Inorganic Expansion Fuels Growth

Chart Industries prefers to invest in acquisitions to gain access to new customers, regions and product line. We believe that a diverse product portfolio, along with new business wins, should help it deliver solid results in the quarters ahead. For 2017, the company anticipates revenues to come in the range of $875-$925 million and adjusted earnings to range between 60 cents and $1 per share.

Notably, in September this year, the company acquired VCT Vogel GmbH (VCT Vogel), provider of specialized services for cryogenic as well as mobile gas tank equipment and trucks. The company anticipates that VCT Vogel will complement its existing mobile equipment businesses while strengthening its foothold in Switzerland, Southern Germany and Austria. Going forward, VCT Vogel will provide services to the company’s European customers for products including Chart Ferox and Flow Instruments. Also, in January, the company’s subsidiary, Chart Lifecycle acquired Hetsco, Inc. The buyout has strengthened Chart Lifecycle’s welding services offered to industrial gas and gas processing units.

In the last three months, Chart Industries’ shares have yielded 13.9% return, outperforming 5.7% gain recorded by the industry it belongs to.


Zacks Rank & Stocks to Consider

With a market capitalization of nearly $1.2 billion, Chart Industries currently carries a Zacks Rank #3 (Hold).

Chart Industries, Inc. Price and Consensus
 

Some better-ranked stocks in the same space are Sun Hydraulics Corporation (SNHY - Free Report) , Kadant Inc. (KAI - Free Report) and Altra Industrial Motion Corporation (AIMC - Free Report) . All these stocks sport a Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sun Hydraulics’ earnings estimates for 2017 and 2018 were revised upward in the last 60 days. Also, the company performed well in the last quarter, delivering a positive earnings surprise of 33.33%.

Kadant’s average earnings surprise for the last four quarters was a positive 19.29%. Also, earnings expectations for 2017 and 2018 improved over the past 60 days.

Altra Industrial Motion’s earnings estimates for 2017 and 2018 were revised upward in the last 60 days. Also, the company pulled off an average positive earnings surprise of 16.95% over the last four quarters.

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