Published: 2022-04-29 00:00:00 ET

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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. GAAP 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, 2021. 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 months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Nature of Operations: We are a leading independent global manufacturer of highly engineered cryogenic equipment servicing multiple applications in the industrial gas and clean energy 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, CO2 Capture and water treatment, among 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: We reclassified equity in earnings of unconsolidated affiliates, net from selling, general, and administrative expenses to equity in earnings of unconsolidated affiliates, net in the 2021 condensed consolidated statement of income and comprehensive income in order to conform to the 2022 presentation.

Use of Estimates: The preparation of financial statements in conformity with U.S. 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. The current macroeconomic conditions 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. Additionally, the current conflict between Russia and Ukraine and the related sanctions imposed by countries against Russia are creating uncertainty in the global economy. While we do not have operations in Russia or Ukraine, we are unable to predict the impact these actions will have on the global economy. As a result of these uncertainties, actual results could differ from estimates and assumptions. If the economy or markets in which we operate weakens or deteriorates, our business, financial condition and results of operations may be materially and adversely impacted. The extent to which our operations will continue to be impacted by the Covid-19 pandemic 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 resurgence of the Covid-19 virus and its variants and actions by government authorities to contain the pandemic or treat its impact, among other things.

Recently Issued Accounting Standards (Not Yet Adopted): In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-02, “Financial Instruments Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.” The amendments in this update require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Accounting Standards Codification (“ASC”) 326. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are currently assessing the effect this ASU will have on our financial position, results of operations, and disclosures.

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The amendments in this update require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2022,

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including interim periods within those fiscal years. We are currently assessing the effect 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,” and in January 2021, the FASB subsequently issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope.” ASU 2020-04 and the subsequent modifications are identified as ASC 848 (“ASC 848”). ASC 848 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. The amendments in ASC 848 are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic, the amendments in ASC 848 must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. We expect application of the amendments to impact accounting for our senior secured revolving credit facility due October 2026. We are currently assessing the effect ASC 848 will have on our financial position, results of operations, and disclosures.

Recently Adopted Accounting Standards: In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance.” The amendments in this update require annual disclosures about transactions with a government that are accounted for by applying a grant or contribution model by analogy. The amendments in this update are effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021. Early application of the amendments is permitted. We adopted this guidance effective January 1, 2022. The adoption of this guidance did not have a material impact on our financial position, results of operations or disclosures.

As reported in our Annual Report on Form 10-K for the year ended December 31, 2021, the structure of our internal organization is divided into the following four reportable segments, which are also our operating segments: Cryo Tank Solutions, Heat Transfer Systems, Specialty Products and Repair, Service & Leasing.

Our Cryo Tank Solutions segment supplies bulk, microbulk and mobile equipment used in the storage, distribution, vaporization, and application of industrial gases and certain hydrocarbons. Our Heat Transfer Systems segment supplies mission critical engineered equipment and systems used in the separation, liquefaction, and purification of hydrocarbon and industrial gases that span gas-to-liquid applications. Our Specialty Products segment supplies products used in specialty end-market applications including hydrogen, LNG, biofuels, CO2 Capture, food and beverage, aerospace, lasers, cannabis and water treatment, among others. Our Repair, Service & Leasing segment provides installation, service, repair, maintenance, and refurbishment of cryogenic products in addition to providing equipment leasing solutions.

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.

We evaluate performance and allocate resources based on operating income as determined in our condensed consolidated statements of income and comprehensive income.

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Segment Financial Information

			Three Months Ended March 31, 2022
			Cryo Tank Solutions						Heat Transfer Systems						Specialty Products						Repair, Service & Leasing						Intersegment Eliminations						Corporate						Consolidated
Sales			$	118.1					$	79.3					$	107.5					$	49.3					$	(0.1)					$	—					$	354.1
Depreciation and amortization expense			4.1						7.7						3.9						4.3						—						0.5						20.5
Operating income (loss) (1) (2)			14.1						(0.2)						16.2						8.3						—						(18.3)						20.1

			Three Months Ended March 31, 2021
			Cryo Tank Solutions						Heat Transfer Systems						Specialty Products						Repair, Service & Leasing						Intersegment Eliminations						Corporate						Consolidated
Sales			$	103.9					$	69.2					$	77.3					$	41.4					$	(3.3)					$	—					$	288.5
Depreciation and amortization expense			3.9						9.5						3.1						2.6						—						0.4						19.5
Operating income (loss) (1) (2)			15.6						3.8						17.9						8.3						—						(16.8)						28.8

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(1)Restructuring costs for the:

•three months ended March 31, 2022 were $0.1 in our Heat Transfer Systems segment.

•three months ended March 31, 2021 were $0.7 ($0.3 - Cryo Tank Solutions, $0.4 - Heat Transfer Systems).

(2)Includes acquisition-related contingent consideration (credits)/charges of $(0.8) and $0.8 in our Specialty Products segment for the three months ended March 31, 2022 and 2021, respectively. These costs were mainly related to our 2020 acquisitions of Sustainable Energy Solutions, Inc. and BlueInGreen, LLC.

Sales by Geography

			Three Months Ended March 31, 2022
			Cryo Tank Solutions						Heat Transfer Systems						Specialty Products						Repair, Service & Leasing						Intersegment Eliminations						Consolidated
North America			$	37.9					$	53.7					$	60.0					$	34.6					$	(0.1)					$	186.1
Europe, Middle East, Africa and India			50.7						19.1						35.2						10.1						—						115.1
Asia-Pacific			28.2						6.1						12.2						4.0						—						50.5
Rest of the World			1.3						0.4						0.1						0.6						—						2.4
Total			$	118.1					$	79.3					$	107.5					$	49.3					$	(0.1)					$	354.1

			Three Months Ended March 31, 2021
			Cryo Tank Solutions						Heat Transfer Systems						Specialty Products						Repair, Service & Leasing						Intersegment Eliminations						Consolidated
North America			$	41.1					$	46.3					$	26.1					$	29.0					$	(1.7)					$	140.8
Europe, Middle East, Africa and India			37.7						7.8						45.6						10.5						(1.0)						100.6
Asia-Pacific			24.2						14.8						5.6						1.8						(0.6)						45.8
Rest of the World			0.9						0.3						—						0.1						—						1.3
Total			$	103.9					$	69.2					$	77.3					$	41.4					$	(3.3)					$	288.5

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Total Assets

Corporate assets mainly include cash and cash equivalents and long-term deferred income taxes as well as certain corporate-specific property, plant and equipment, net and certain investments. Our allocation methodology for property, plant and equipment, net of the reportable segments differs from our allocation method of depreciation expense of a reportable segment and therefore, depreciation expense does not entirely align with the related depreciable assets of the reportable segments. Furthermore, since finite-lived intangible assets are excluded from total assets of reportable segments while amortization expense is allocated to each of our reportable segments, amortization expense by segment inherently does not align with the related amortizable intangible assets of the reportable segments.

			March 31, 2022						December 31, 2021
Cryo Tank Solutions			$	448.8					$	407.2
Heat Transfer Systems			256.1						225.8
Specialty Products			357.9						327.5
Repair, Service & Leasing			163.0						186.2
Total assets of reportable segments			1,225.8						1,146.7
Goodwill (1)			991.3						994.6
Identifiable intangible assets, net (1)			544.7						556.1
Corporate			324.1						346.4
Total			$	3,085.9					$	3,043.8

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(1)See Note 6, “Goodwill and Intangible Assets,” for further information related to goodwill and identifiable intangible assets, net.

Disaggregation of Revenue

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

			Three Months Ended March 31, 2022
			Cryo Tank Solutions						Heat Transfer Systems						Specialty Products						Repair, Service & Leasing						Intersegment Eliminations						Consolidated
Point in time			$	107.4					$	5.9					$	59.0					$	25.9					$	—					$	198.2
Over time			10.7						73.4						48.5						23.4						(0.1)						155.9
Total			$	118.1					$	79.3					$	107.5					$	49.3					$	(0.1)					$	354.1

			Three Months Ended March 31, 2021
			Cryo Tank Solutions						Heat Transfer Systems						Specialty Products						Repair, Service & Leasing						Intersegment Eliminations						Consolidated
Point in time			$	98.7					$	5.6					$	61.9					$	26.7					$	(2.9)					$	190.0
Over time			5.2						63.6						15.4						14.7						(0.4)						98.5
Total			$	103.9					$	69.2					$	77.3					$	41.4					$	(3.3)					$	288.5

Refer to Note 2, “Reportable Segments,” for a table of revenue by reportable segment disaggregated by geography.

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Contract Balances

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

			March 31, 2022						December 31, 2021						Year-to-date Change ($)						Year-to-date Change (%)
Contract assets
Accounts receivable, net of allowances			$	253.0					$	236.3					$	16.7					7.1		%
Unbilled contract revenue			126.0						93.5						32.5						34.8		%
Contract liabilities
Customer advances and billings in excess of contract revenue			$	177.9					$	148.5					$	29.4					19.8		%
Long-term deferred revenue			0.1						0.4						(0.3)						(75.0)		%

Revenue recognized for the three months ended March 31, 2022 and 2021, that was included in the contract liabilities balance at the beginning of each year was $63.7 and $52.5, respectively. The amount of revenue recognized during the three months ended March 31, 2022 from performance obligations satisfied or partially satisfied in previous periods as a result of changes in the estimates of variable consideration related to long-term contracts, was not significant.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of firm signed purchase orders or other written contractual commitments from customers for which work has not been performed, or is partially completed, and excludes unexercised contract options and potential orders. As of March 31, 2022, the estimated revenue expected to be recognized in the future related to remaining performance obligations was $1,477.0. We expect to recognize revenue on approximately 70% to 75% of the remaining performance obligations over the next 12 months and the remaining over the next few years thereafter.

The following table summarizes the components of inventory:

			March 31, 2022						December 31, 2021
Raw materials and supplies			$	198.4					$	178.8
Work in process			65.1						64.4
Finished goods			87.1						78.3
Total inventories, net			$	350.6					$	321.5

The allowance for excess and obsolete inventory balance at March 31, 2022 and December 31, 2021 was $10.6 and $10.9, respectively.

Lessee Accounting

As of March 31, 2022 and December 31, 2021, operating right-of-use (“ROU”) assets and lease liabilities were $24.6 and $24.5 ($5.6 of which was current) and $27.3 and $27.2 ($5.8 of which was current), respectively. The weighted-average remaining term for lease contracts was 4.6 years at March 31, 2022, with maturity dates ranging from September 2022 to February 2029. The weighted-average discount rate was 2.4% at March 31, 2022. ROU assets are classified as property, plant and equipment, net in the condensed consolidated balance sheets.

We incurred $3.4 and $3.0 of rental expense under operating leases for the three months ended March 31, 2022 and 2021, 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 operating activities for the respective periods. This expense

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consisted primarily of payments for base rent on building and equipment leases. Payments related to short-term lease costs and taxes and variable service charges on leased properties were immaterial. In addition, we have the right, but no obligation, to renew certain leases for various renewal terms.

The following table summarizes future minimum lease payments for non-cancelable operating leases as of March 31, 2022:

2022			$	5.2
2023			6.3
2024			5.8
2025			4.7
2026			2.7
Thereafter (1)			0.9
Total future minimum lease payments			$	25.6

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(1)     As of March 31, 2022, future minimum lease payments for non-cancelable operating leases for the period subsequent to 2025 relate to eight leased facilities.

Lessor Accounting

We lease equipment manufactured by Chart primarily through our Cryo-Lease program as sales-type and operating leases. As of March 31, 2022 and December 31, 2021, our short-term net investment in sales-type leases was $10.4 and $9.3, respectively and is included in other current assets in our condensed consolidated balance sheets. Our long-term net investment in sales type leases was $33.8 and $31.9 as of March 31, 2022 and December 31, 2021, respectively, and is included in other assets in our condensed consolidated balance sheets. For sales type leases, interest income was $0.5 and an immaterial amount in the condensed consolidated statements of income for the three months ended March 31, 2022 and 2021, respectively.

Operating leases offered by Chart may include early termination options. At the end of a lease, a lessee generally has the option to either extend the lease, purchase the underlying equipment for a fixed price or return it to Chart. The lease agreements clearly define applicable return conditions and remedies for non-compliance to ensure that leased equipment will be in good operating condition upon return.

The following table represents sales from sales-type and operating leases:

			Three Months Ended March 31,
			2022						2021
Sales-type leases			$	5.3					$	3.9
Operating leases			1.0						0.4
Total sales from leases			$	6.3					$	4.3

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The following table represents scheduled payments for sales-type leases:

			March 31, 2022
2022			$	8.1
2023			10.8
2024			10.8
2025			10.7
2026			7.6
Thereafter			3.0
Total			51.0
Less: unearned income			6.8
Total			$	44.2

The following table represents the cost of equipment leased to others:

			March 31, 2022						December 31, 2021
Equipment leased to others, cost			$	13.4					$	13.6
Less: accumulated depreciation			2.3						2.1
Equipment leased to others, net			$	11.1					$	11.5

The following table represents payments due for operating leases:

			March 31, 2022
2022			$	0.4
2023			0.1
2024			0.1
2025			0.1
2026			0.1
Thereafter			0.1
Total			$	0.9

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Goodwill

The following table represents the changes in goodwill by segment:

			Cryo Tank Solutions						Heat Transfer Systems						Specialty Products						Repair, Service & Leasing						Consolidated
Balance at December 31, 2021			$	84.9					$	433.6					$	300.9					$	175.2					$	994.6
Foreign currency translation adjustments and other			(2.0)						(1.0)						—						—						(3.0)
Purchase price adjustments (1)			—						—						(0.3)						—						(0.3)
Balance at March 31, 2022			$	82.9					$	432.6					$	300.6					$	175.2					$	991.3
Accumulated goodwill impairment loss at December 31, 2021			$	23.5					$	49.3					$	35.8					$	20.4					$	129.0
Impairment loss			—						—						—						—						—
Accumulated goodwill impairment loss at March 31, 2022			$	23.5					$	49.3					$	35.8					$	20.4					$	129.0

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(1)During the first quarter of 2022, we recorded a purchase price adjustment that decreased goodwill by $0.3 in Specialty Products related to the Earthly Labs, Inc., L.A. Turbine and AdEdge acquisitions. For further information regarding goodwill acquired and the purchase price adjustments during the period refer to Note 10, “Business Combinations.”

Intangible Assets

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

									March 31, 2022												December 31, 2021
			Weighted-average Estimated Useful Life						Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Finite-lived intangible assets:
Customer relationships			13 years						$	311.1					$	(87.8)					$	312.1					$	(82.2)
Unpatented technology			13 years						184.1						(33.4)						184.6						(30.1)
Patents and other			6 years						6.0						(0.9)						7.9						(2.3)
Trademarks and trade names			14 years						2.9						(1.7)						3.5						(1.8)
Land use rights			50 years						11.4						(1.7)						11.4						(1.6)
Total finite-lived intangible assets			14 years						515.5						(125.5)						519.5						(118.0)
Indefinite-lived intangible assets:
Trademarks and trade names (2)									154.7						—						154.6						—
Total intangible assets									$	670.2					$	(125.5)					$	674.1					$	(118.0)

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

(2)Accumulated indefinite-lived intangible assets impairment loss was $16.0 at both March 31, 2022 and December 31, 2021.

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Amortization expense for intangible assets subject to amortization was $10.1 and $8.8 for the three months ended March 31, 2022 and 2021, respectively. We estimate amortization expense to be recognized during the next five years as follows:

For the Year Ending December 31,
2022			$	37.2
2023			39.6
2024			38.6
2025			37.7
2026			37.1

Government Grants

During the fourth quarter of 2021, we were selected by the U.S. Department of Energy (“DOE”) for funding of up to $5.0 million to engineer and build our Cryogenic Carbon CaptureTM (“CCC”) system for a cement plant (“CCC Grants”). During the project’s duration, the DOE shall reimburse us in cash for approved expenses we incur. This project began on February 1, 2022, at which point expenses incurred may be submitted for reimbursement. The agreement will be effective until April 30, 2025. We have not yet received any funding for this grant.

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:

			March 31, 2022						December 31, 2021
Current			$	0.5					$	0.5
Long-term			7.0						7.0
Total China Government Grants			$	7.5					$	7.5

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

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Equity Method Investments

The following table represents the activity in equity method investments:

						Equity Method Investments (1) (2) (3)
Balance at December 31, 2021						$	99.6
New investments (4)						0.5
Equity in loss of unconsolidated affiliates, net						(0.4)
Foreign currency translation adjustments and other						1.2
Balance at March 31, 2022						$	100.9

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(1)Cryomotive: Our equity method investment in Cryomotive GmbH (“Cryomotive”) was $6.5 and $7.1 at March 31, 2022 and December 31, 2021, respectively. Equity in loss of unconsolidated affiliates, net of this investment was $0.5 for the three months ended March 31, 2022 and is classified in equity in earnings (loss) earnings of unconsolidated affiliates, net in the condensed consolidated statement of income for the three months ended March 31, 2022.

(2)HTEC: Our equity method investment in HTEC Hydrogen Technology & Energy Corporation (“HTEC”) was $87.4 and $86.4 at March 31, 2022 and December 31, 2021, respectively. Equity in loss of unconsolidated affiliates, net of this investment was $0.3 for the three months ended March 31, 2022.

(3)Hudson Products: Also included in our equity method investments is a 50% ownership interest in a joint venture with Hudson Products de Mexico S.A. de CV which totaled $3.6 and $3.3 at March 31, 2022 and December 31, 2021, respectively. 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 it is not consolidated. We recognized equity in earnings of unconsolidated affiliates, net of this investment of $0.3 and $0.1 for the three months ended March 31, 2022 and March 31, 2021, respectively.

Liberty LNG: Additionally, we have a 25% ownership interest in Liberty LNG, which totaled $2.5 and $2.4 at March 31, 2022 and December 31, 2021, respectively. We recognized equity in earnings of unconsolidated affiliates, net of this investment of $0.1 for the three months ended March 31, 2022. Our equity in earnings of unconsolidated affiliates, net from this equity method investment were not material for the three months ended March 31, 2021.

We have another immaterial investment in an unconsolidated affiliate of $0.4 for all periods presented.

(4)During the first quarter 2022, we completed an investment for a 50% ownership interest in a joint venture in AdEdge India for $0.5.

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Investments in Equity Securities

The following table summarizes the components of our investments in equity securities:

			Investment in Equity Securities, Level 1 (1)						Investment in Equity Securities, Level 2 (1)						Investments in Equity Securities, All Others (2)						Investments Total
Balance at December 31, 2021			$	31.3					$	6.2					$	40.3					$	77.8
New investments (3)			—						—						3.4						3.4
(Decrease) increase in fair value of investments in equity securities			(3.7)						1.1						—						(2.6)
Foreign currency translation adjustments and other			(0.7)						0.1						—						(0.6)
Balance at March 31, 2022			$	26.9					$	7.4					$	43.7					$	78.0

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(1)McPhy: Investment in equity securities Level 1 includes our investment in McPhy (Euronext Paris: MCPHY - ISIN; FR001742329). McPhy’s common stock trades on the Euronext Paris stock exchange and therefore we measure our investment in McPhy using Level 1 fair value inputs. The fair value of our investment in McPhy was $26.9 and $31.3 at March 31, 2022 and December 31, 2021, respectively. We recognized an unrealized loss in our investment in McPhy of $3.7 and $2.6 for the three months ended March 31, 2022 and 2021, respectively.

Stabilis: Investment in equity securities Level 2 includes our investment in Stabilis Energy, Inc. (NasdaqCM: SLNG) (“Stabilis”). Stabilis represents an instrument with quoted prices that trades less frequently than certain of our other exchange-traded instruments and therefore we measure our investment in Stabilis using Level 2 fair value inputs. The fair value of our investment in Stabilis was $7.4 and $6.2 at March 31, 2022 and December 31, 2021, respectively. We recognized an unrealized gain of $1.1 and $5.9 for the three months ended March 31, 2022 and March 31, 2021, respectively, in our investment in Stabilis.

(2)Transform: The fair value of our investment in Transform Materials LLC (“Transform Materials”) was $25.1 at both March 31, 2022 and December 31, 2021.

Svante: The fair value of our investment in Svante Inc. (“Svante”) was $15.2 at both March 31, 2022 and December 31, 2021.

(3)Clean H2 Infra Fund: During the first quarter of 2022, we completed an investment in the Clean H2 Infra Fund. The Clean H2 Infra Fund is measured at fair value using the net asset value (“NAV”) per share practical expedient and is not classified in the fair value hierarchy. The fair value of our investment in the Clean H2 Infra Fund was euro 2.2 million (equivalent to $2.4) at March 31, 2022. See “Clean H2 Infra Fund (f/k/a FiveT Hydrogen Fund)” below for further information.

Gold Hydrogen LLC: During the first quarter of 2022, we completed an investment in Gold Hydrogen LLC (“Gold Hydrogen”) in the amount of $1.0. This investment is measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer and is included in the investments in equity securities, all others category in the table above. As of March 31, 2021, the value of the investment was $1.0. Gold Hydrogen is a subsidiary company established by Cemvita Factory, Inc. focused on commercializing viable technologies for the subsurface production of biohydrogen.

Our investments in Transform Materials, Svante and Gold Hydrogen represent equity instruments without a readily determinable fair value.

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Co-Investment Agreement

On September 7, 2021, we entered into a Co-Investment Agreement with I Squared Capital (“ISQ”), an infrastructure-focused private equity firm (the “Co-Investment Agreement”), pursuant to which Chart and ISQ have agreed to the following:

•In the following circumstances, ISQ shall have the right but not the obligation to require Chart to purchase all (and not less than all) of the shares of HTEC common stock acquired as part of ISQ’s investment described above (the “Put Option”):

i.the third anniversary of the Closing Date,

ii.the date Chart undergoes a change of control (subject to certain exceptions),

iii.the date upon which Chart, during the period from the Closing Date through the third anniversary of the Closing Date, has made certain distributions to its shareholders (including cash or other dividends, or via a spin-off transaction), in excess of $900.0,

iv.the date, if any, upon which our leverage ratio exceeds certain thresholds and

v.the date, if any, of a bankruptcy event (including certain insolvency-related actions) involving Chart.

•In the event that ISQ exercises its Put Option, we shall pay to ISQ an amount in cash in exchange for the HTEC common stock then held by ISQ such that ISQ shall realize the greater of (i) an internal rate of return of 10% and (ii) a multiple on ISQ’s invested capital of 1.65x.

•Conversely, at any time after the third anniversary of the Closing Date, we shall have the right to purchase from ISQ up to 20% of the shares of HTEC common stock acquired as part of the ISQ Investment. In exchange for the common stock, we shall pay ISQ the greater of (i) an internal rate of return of 12.5% and (ii) a multiple on ISQ’s invested capital of 1.65x.

•In addition, we shall have (i) a right of first offer: if ISQ desires to transfer any of its HTEC common stock to any third party, we shall have the right to first offer provided that upon notice, we shall have the option to make a first offer to purchase the offered interest in cash exclusively and (ii) a right of first refusal: if ISQ desires to sell its HTEC common stock to any third party pursuant to a definitive agreement therewith, we shall have the right of first refusal provided that the purchase consideration paid by Chart to ISQ upon our exercise of such right of first refusal must be equal to 102% of the purchase consideration agreed to be paid by such third party.

•The Co-Investment Agreement shall terminate automatically upon the consummation of an initial public offering by HTEC of its common stock.

Accounting Treatment of Put and Call Options

We record the Put and Call Options (together “the Options”) at fair value and record any change in fair value through earnings at each reporting period. The fair value of the Options was not material on March 31, 2022 or December 31, 2021.

Clean H2 Infra Fund (f/k/a FiveT Hydrogen Fund)

As previously announced on April 5, 2021, we were admitted as an anchor investor in the Clean H2 Infra Fund (f/k/a the FiveT Hydrogen Fund), which is a private equity fund whose main objective is to support the hydrogen market by investing globally, directly or indirectly, in infrastructure projects or companies active in the hydrogen sector (the “Hydrogen Fund”). The Five T Hydrogen Fund and Ardian, Europe’s largest private investment house, formed a joint venture known as Hy24. As discussed in the “Equity Method Investments” section above, our investment to date is euro 2.2 million, making our unfunded commitment euro 47.8 million.

The fund manager of the Hydrogen Fund (the “Management Company”) will establish a Limited Partners Advisory Committee (the “LPAC”) as from the first closing date (which has yet to occur but shall be no later than June 30, 2022) to consult with and help advise the Management Company with respect to certain key decisions governing the fund that the Management Company shall make. The LPAC is expected to be comprised by up to fifteen (15) members, the majority of whom shall be chosen by certain industrial investors and who shall be (i) representatives of the anchor investors and (ii) subject to any remaining available seats, representatives of the non-anchor investors selected by the Management Company.

Class A1 Shares, which we shall hold, are entitled to the return of any associated paid-up capital contributions (excluding any subscription premium or default interest, if any), the Preferred Return calculated thereon as described below, and their share of the Hydrogen Fund’s capital gain beyond the Preferred Return in accordance with the order of distributions in the by-laws of the Hydrogen Fund (in each case to the extent of available funds). The “Preferred Return” equals an annual interest rate of seven percent (7%) if fifteen percent (15%) of the Hydrogen Fund’s aggregate capital commitments from all investors is

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invested in strategic investments; provided, however, that such seven percent (7%) interest rate shall be reduced in a linear fashion to six and one-half percent (6.5%) if twenty percent (20%) of the Hydrogen Fund’s aggregate capital commitments from all investors is invested in strategic investments. The Management Company is currently targeting aggregate capital commitments from all investors of at least euro 1.5 billion; provided, however, that the Hydrogen Fund has a hard cap on investments equal to euro 1.8 billion.

The Hydrogen Fund shall determine the net asset value of each class of its shares at the end of each quarter (including the Class A1 Shares that we shall hold), which will be used to record the fair value of our investment.

The Hydrogen Fund will have a term of twelve (12) years, commencing from the first closing date, subject to certain potential extensions. Investors cannot request the redemption of their shares by the Hydrogen Fund at any time prior to the final liquidation of the fund. Capital calls will be made by the Management Company in accordance with investment opportunities and the financing needs of the Hydrogen Fund’s activities. The Management Company shall not issue capital calls for an aggregate amount exceeding thirty percent (30%) of the aggregate capital commitments from all investors in any rolling twelve-month period unless the LPAC has given prior consent.

The Management Company is required to send capital call requests to investors at least ten (10) business days prior to their deadline for payment. In the event that, following any capital call made by the Management Company, an investor of the Hydrogen Fund does not timely fund all or any portion of its capital commitment required thereby, such investor will be charged interest thereon equal to the Preferred Return plus one-half percent (0.5%), and shall not be entitled to receive distributions from the Hydrogen Fund until it is no longer delinquent.

Summary of Outstanding Borrowings

The following table represents the components of our borrowings:

			March 31, 2022						December 31, 2021
Senior secured revolving credit facility due October 2026 (1) (2)			$	618.1					$	600.8
Convertible notes due November 2024:
Principal amount			258.8						258.8
Unamortized debt issuance costs			(2.6)						(2.9)
Convertible notes due November 2024, net of unamortized debt issuance costs			256.2						255.9
Total debt, net of unamortized debt issuance costs			874.3						856.7
Less: current maturities (3)			256.2						255.9
Long-term debt			$	618.1					$	600.8

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(1)As of March 31, 2022, there were $618.1 in borrowings outstanding under the senior secured revolving credit facility due October 2026 bearing an interest rate of 2.4% (2.1% as of December 31, 2021) and $42.5 in letters of credit and bank guarantees outstanding supported by the senior secured revolving credit facility due 2026. As of March 31, 2022, the senior secured revolving credit facility due 2026 had availability of $339.4.

(2)A portion of borrowings outstanding under our senior secured revolving credit facility due 2026 are denominated in euros (“EUR Revolver Borrowings”). EUR Revolver Borrowings outstanding were euro 78.0 million (equivalent to $86.6) and euro 78.0 million (equivalent to $88.3) at March 31, 2022 and December 31, 2021, respectively. During the three months ended March 31, 2022, we recognized an unrealized foreign currency gain of $0.9 relative to the translation of the EUR Revolver Borrowings outstanding during the reporting period. This unrealized foreign currency gain is classified as foreign currency loss and other in the condensed consolidated statements of income for the three months ended March 31, 2022.

(3)Our convertible notes due November 2024, net of unamortized debt issuance costs, are included in current maturities for both periods presented.

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Senior Secured Revolving Credit Facility

On October 18, 2021 we entered into the Fifth Amended and Restated Credit Agreement, which provides for a Senior Secured Revolving Credit Facility (the “SSRCF”). The SSRCF matures on October 19, 2026.

•The SSRCF has a borrowing capacity of $1,000.0 and includes a $100.0 sub limit for letters of credit, a $250.0 sub limit for discretionary letters of credit and a $100.0 sub-limit for swingline loans.

•We may, subject to the satisfaction of certain conditions, request increases in the revolving credit facility commitments in an aggregate principal amount of up to $500.0 or a lesser amount in integral multiples of $25.0 to the extent existing or new lenders agree to provide such increased or additional commitments, as applicable.

•The SSRCF bears interest at a base rate plus an applicable margin determined on a leveraged-based scale which (before giving effect to the sustainability pricing adjustments described below) ranges from 25 to 125 basis points for base rate loans and 125 to 225 basis points for LIBOR loans.

•The applicable margin described above is subject to further adjustments based on the reductions in the ratio between (i) the total greenhouse gas emissions, measured in metric tons CO2e, of Chart and its subsidiaries during such calendar year and (ii) the aggregate revenue, measured in U.S. Dollars, of Chart and its subsidiaries during such calendar year. These additional pricing adjustments range from an addition of 0.05% to a reduction of 0.025% in the applicable margin described above.

•We are required to pay commitment fees on any unused commitments under the SSRCF which, before giving effect to the sustainability fee adjustments (as described below), is determined on a leverage-based sliding scale ranging from 20 to 35 basis points.

•The commitment fees described above are also subject to sustainability fee adjustments based on the aforementioned ratio. The sustainability fee adjustments range from an addition of 0.01% to a reduction of 0.01%.

•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 SSRCF include financial maintenance covenants that, as of the last day of any fiscal quarter ending on and after September 30, 2021, (i) require the ratio of the amount of Chart and its subsidiaries’ consolidated total net indebtedness to consolidated EBITDA to be less than specified maximum ratio levels and (ii) require the ratio of the amount of Chart and its subsidiaries’ consolidated EBITDA to consolidated cash interest expense to be greater than a specified minimum ratio level. The SSRCF includes a number of other customary covenants including, but not limited to, restrictions on our ability to incur additional indebtedness, create liens or other encumbrances, sell assets, enter into sale and lease-back transactions, make certain payments, investments, loans, advances or guarantees, make acquisitions and engage in mergers or consolidations and pay dividends or distributions. At March 31, 2022, we were in compliance with all covenants.

The SSRCF also contains 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 SSRCF is guaranteed by Chart and substantially all of its U.S. subsidiaries, and secured by substantially all of the assets of Chart and its U.S. subsidiaries and 65% of the capital stock of our material non-U.S. subsidiaries (as defined by the Fifth Amended and Restated Credit Agreement) that are owned by U.S. subsidiaries.

We recorded $9.1 in deferred debt issuance costs related to the SSRCF, which includes $6.1 in unamortized debt issuance costs from previous credit facilities. Deferred debt issuance costs related to the SSRCF are presented in other assets in the condensed consolidated balance sheets and are being amortized over the five-year term of the SSRCF. At March 31, 2022 and December 31, 2021, unamortized debt issuance costs associated with the SSRCF were $8.3 and $8.7, respectively.

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The following table summarizes interest expense and financing costs amortization related to the 2026 Credit Facilities:

			Three Months Ended March 31,
			2022						2021
Interest expense, senior secured revolving credit facility due October 2026			$	3.3					$	—
Interest expense, term loan due June 2024			—						0.6
Interest expense, senior secured revolving credit facility due June 2024			—						0.7
Total interest expense			$	3.3					$	1.3
Financing costs amortization, senior secured revolving credit facility due October 2026			$	0.5					$	—
Financing costs amortization, senior secured revolving credit facility and term loan due June 2024			—						1.0
Total financing costs amortization			$	0.5					$	1.0

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”). On December 31, 2020, we entered into the First Supplemental Indenture (the “Supplemental Indenture”) to the Indenture, between Chart and Wells Fargo Bank, National Association, as trustee, governing the 2024 Notes. Pursuant to the Supplemental Indenture, Chart irrevocably elected (i) to eliminate Chart’s option to elect Physical Settlement (as defined in the Indenture) on any conversion of 2024 Notes that occurs on or after the date of the Supplemental Indenture and (ii) that, with respect to any Combination Settlement (as defined in the Indenture) for a conversion of 2024 Notes, the Specified Dollar Amount (as defined in the Indenture) that will be settled in cash per $1,000 principal amount of the Notes shall be no lower than $1,000. 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 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 either (1) cash or (2) cash for the principal amount of the 2024 Notes and any combination of cash and shares for the excess settlement amount above the principal amount of the 2024 Notes, at our election (subject to, and in accordance with, the settlement provisions of the Indenture and Supplemental Indenture).

The initial conversion rate for the 2024 Notes is 17.0285 shares of common stock (subject to adjustment as provided for in the Indenture) per $1,000 principal amount of the 2024 Notes, which is equal to an initial conversion price of approximately $58.725 per share, representing a conversion premium of approximately 35% above the closing price of our common stock of $43.50 per share on October 31, 2017. In addition, following certain corporate events that occur prior to the maturity date as described in the Indenture, we will pay a make-whole premium by increasing the conversion rate for a holder who elects to convert its 2024 Notes in connection with such a corporate event in certain circumstances. For purposes of calculating earnings per share, if the average market price of our common stock exceeds the applicable conversion price during the periods reported, shares contingently issuable under the 2024 Notes will have a dilutive effect with respect to our common stock. Since our closing common stock price of $171.77 at the end of the period exceeded the conversion price of $58.725, the if-converted value exceeded the principal amount of the 2024 Notes by approximately $498.2 at March 31, 2022. 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

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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.

As of April 1, 2022, the 2024 Notes continue to be convertible at the option of the shareholders. This conversion right, which will remain available until June 30, 2022, was triggered since the closing price of our common stock was greater than or equal to $76.3425 (130% of the conversion price of the 2024 Notes) for at least 20 trading days during the last 30 trading days ending on March 31, 2022. Since the holders of the 2024 Notes could potentially convert their 2024 Notes at their option during the three month period subsequent to March 31, 2022, the $258.8 principal amount of the 2024 Notes was classified as a current liability in the unaudited condensed consolidated balance sheet at March 31, 2022. As of December 31, 2021, the 2024 Notes were convertible at the option of the holders, and the liability component of the 2024 Notes was classified as a current liability. We will reassess the convertibility of the 2024 Notes and the related balance sheet classification on a quarterly basis. There have been no conversions as of the date of this filing.

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

			Three Months Ended March 31,
			2022						2021
2024 Notes, 1.0% contractual interest coupon			$	0.6					$	0.6
2024 Notes, financing costs amortization (1)			$	0.2					$	0.2

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(1)We amortize debt issuance costs of $6.8 over the term of the 2024 Notes using the effective interest method.

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 $86.4 under certain of our foreign facilities. As of March 31, 2022 and December 31, 2021 there were none outstanding in USD equivalent in borrowings outstanding under these facilities.

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 $66.6 and $31.2 as of March 31, 2022 and December 31, 2021, respectively.

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Letters of Credit

L.A. Turbine, a wholly-owned subsidiary of the Company, had $0.2 in deposits in a bank outside of the SSRCF to secure letters of credit as of both March 31, 2022 and December 31, 2021. The deposits are treated as restricted cash and restricted cash equivalents in the unaudited condensed consolidated balance sheets.

Rate Swap Agreement

On April 1, 2022 we entered into a euro 100.0 million (equivalent to $110.0) cross currency swap as a net investment hedge of our investments in certain international subsidiaries that use the euro as their functional currency in order to reduce the volatility caused by changes in exchange rates.

Fair Value Disclosures

The fair value of the 2024 Notes was approximately 296% and 276% of their par value as of March 31, 2022 and December 31, 2021, respectively. The 2024 Notes are actively quoted instruments and, accordingly, the fair value of the 2024 Notes was determined using Level 1 inputs.

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, 2021			$	10.5
Issued – warranty expense			1.1
Warranty usage			(2.2)
Balance at March 31, 2022			$	9.4

Earthly Labs Inc. Acquisition

On December 14, 2021, we acquired the remaining 85% of Earthly Labs (we previously held a 15% equity investment in Earthly Labs) for cash and stock for a previously disclosed estimated preliminary purchase price of $63.1. During the first three months of 2022, we decreased the value of the stock consideration by $1.2 to reflect the December 13, 2021 closing price of Chart common stock of $160.63 per share, which lowered the preliminary estimated purchase price to $61.9 or $58.4 net of $3.5 cash acquired. In connection with the Earthly Labs acquisition, Chart shall pay to the sellers a royalty on sales of a carbon capture unit for residential use launched for sale to the public by Chart, which has not yet been developed. Refer to the “Contingent Consideration” section below for further discussion. Earthly Labs is a leading provider of small-scale carbon capture systems offering an affordable, small footprint technology platform called “CiCi ®” to capture, recycle, reuse, track and sell CO2. Earthly Labs proprietary approach includes hardware, software and services to address half of all existing carbon dioxide emissions from industrial sources while converting molecules to value.

The preliminary estimated fair value of the total net assets acquired include goodwill, identifiable intangible assets and other net liabilities at the date of acquisition in the amounts of $46.5, $27.0 and $3.5, respectively, (as previously reported: $47.2, $27.0 and $11.1, respectively). Amounts previously reported were preliminary and based on provisional fair values. During the first three months of 2022, we received and analyzed new information about certain assets acquired and subsequently adjusted their fair values accordingly. Intangible assets consists of unpatented technology, trade names, customer relationships and backlog.

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AdEdge Acquisition

On August 27, 2021, we acquired 100% of the equity interests of AdEdge Holdings, LLC (“AdEdge”) for $37.5 in cash, net of $1.4 of cash acquired and a net working capital settlement of $0.8 finalized during the first quarter of 2022. AdEdge is a water treatment technology and solution provider specializing in the design, development, fabrication and supply of water treatment solutions, specialty medias, legacy and innovative technologies that remove a wide range of contaminants from water. The preliminary estimated fair value of the total net assets acquired include goodwill, identifiable intangible assets and other net assets at the date of acquisition in the amounts of $16.6, $18.2 and $4.1, respectively (as previously reported: $15.9, $18.2 and $4.8, respectively). During the first three months of 2022, we increased goodwill by $0.7, which included the $0.8 final net working capital adjustment mentioned above, partially offset by a $0.1 adjustment to other assets.

L.A. Turbine Acquisition

On July 1, 2021, we acquired 100% of the equity interests of L.A. Turbine (“LAT”) for approximately $76.6 in cash (subject to certain customary adjustments), net of $1.4 of cash acquired. LAT is a global leader in turboexpander design, engineering, manufacturing, assembly and testing process for new and aftermarket equipment, with significant in-house engineering expertise.

The preliminary estimated useful lives of identifiable finite-lived intangible assets range from less than one year to 15 years. The excess of the purchase price over the estimated fair values is assigned to goodwill. LAT complements our Heat Transfer Systems and Specialty Products segments with the addition of its application-specific, highly engineered turboexpanders which further differentiates Chart’s end market diversity especially in hydrogen and helium liquefaction in addition to industrial gas, natural gas processing, power generation and petrochemical applications. Furthermore, LAT’s aftermarket business will further bolster our Repair, Service & Leasing segment. The addition of LAT’s turboexpanders new equipment and aftermarket businesses allows Chart to offer a broader technology solution for our customers. Management anticipates the combination of strong engineering cultures will continue to further develop full service solutions for our customers. The preliminary estimated goodwill was established due to the benefits outlined above, as well as the benefits derived from the anticipated synergies of LAT integrating with our Heat Transfer Systems, Specialty Products and Repair, Service & Leasing segments. Goodwill recorded for the LAT acquisition is not expected to be deductible for tax purposes.

The following table summarizes the preliminary estimated fair value of the assets acquired in the L.A. Turbine acquisition at the acquisition date:

Net assets acquired:
Identifiable intangible assets			$	43.7
Goodwill (1)			41.9
Other assets (1)			4.8
Property, plant and equipment			2.6
Cash and cash equivalents			1.4
Liabilities			(16.4)
Net assets acquired			$	78.0

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(1)As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2021, we reported goodwill and other assets of $42.1 and $4.6, respectively. During the first quarter of 2022, we recorded purchase price adjustments that decreased goodwill by $0.2 and increased other assets by $0.2.

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Information regarding preliminary estimated identifiable intangible assets acquired in the L.A. Turbine acquisition is presented below:

			Weighted-average Estimated Useful Life						Preliminary Estimated Asset Fair Value
Finite-lived intangible assets acquired:
Unpatented technology			14.5 years						$	33.4
Customer relationships			14.5 years						1.5
Backlog			2.5 years						0.7
Other identifiable intangible assets (1)			3.4 years						0.2
Total finite-lived intangible assets acquired			14.2 years						35.8
Indefinite-lived intangible assets acquired:
Trademarks and trade names									7.9
Total intangible assets acquired									$	43.7

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(1)Other identifiable intangible assets is included in “Patents and other” in Note 6, “Goodwill and Intangible Assets.”

Cryogenic Gas Technologies, Inc. Acquisition

On February 16, 2021, we acquired 100% of the equity interests of Cryogenic Gas Technologies, Inc. (“Cryo Technologies”) for approximately $55.0 in cash (subject to certain customary adjustments), net of $0.6 cash acquired. Cryo Technologies is a global leader in custom engineered process systems to separate, purify, refrigerate, liquefy and distribute high value industrial gases such as hydrogen, helium, argon and hydrocarbons with design capabilities for cold boxes for hydrogen and helium use. The distribution systems Cryo Technologies supplies are located within the helium and hydrogen liquefaction facilities and are inclusive of trailer loading systems, which facilitates the first step in product distribution. During the first quarter of 2022 the Cryo Technologies purchase price allocation was finalized. The fair value of the total net assets acquired include goodwill, identifiable intangible assets and other net assets at the date of acquisition was $34.9, $19.5 and $1.2, respectively. Intangible assets consists of customer relationships, unpatented technology, trademarks and trade names, backlog and non-compete agreements.

The purchase price allocations of Earthly Labs, AdEdge and LAT (the “acquisitions”) are preliminary and are based on provisional fair values and subject to revision as we finalize third-party valuations and other analyses. Final determination of the fair values may result in further adjustments to the value of net assets acquired.

As defined in Note 2, “Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended December 31, 2021, we preliminarily allocated the acquisition consideration to tangible and identifiable intangible assets acquired and liabilities assumed based on their preliminary estimated fair values as of the acquisition date. The preliminary fair value of the acquired tangible and identifiable intangible assets was determined based on inputs that are unobservable and significant to the overall fair value measurement. The preliminary fair value is based on estimates and assumptions made by management at the time of the acquisition. As such, the acquisitions are classified as Level 3 fair value hierarchy measurements and disclosures.

Contingent Consideration

The fair value of contingent consideration was $16.9 for SES and $3.2 for BIG at the date of acquisitions and was valued according to a discounted cash flow approach, which included assumptions regarding the probability of achieving certain targets and a discount rate applied to the potential payments. Potential payments are measured between the period commencing April 1, 2022 and ending on December 31, 2028 based on the attainment of certain earnings targets. The potential payments related to both SES and BIG contingent consideration on a combined basis is between $0.0 and $31.0. The estimated fair value of contingent consideration related to SES decreased by $0.5 and increased by $0.7 for the three months ended March 31, 2022 and 2021, respectively. The estimated fair value of contingent consideration related to BIG decreased by $0.3 and increased by $0.1 for the three months ended March 31, 2022 and 2021, respectively.

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In connection with the Earthly Labs acquisition, Chart will pay to the sellers a royalty on sales of carbon capture unit for residential use launched for sale to the public by Chart in an amount equal to 4% of such sales. Potential royalty payments shall be paid to the sellers during the three year period following Chart’s launch of this product. This product has not yet been developed and as such, the fair value of the contingent consideration liability that arises from this arrangement was insignificant as of March 31, 2022 and December 31, 2021.

Valuations are performed using Level 3 inputs as defined in Note 2, “Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended December 31, 2021 and are evaluated on a quarterly basis based on forecasted sales and earnings targets. Contingent consideration liabilities are classified as other current liabilities and other long-term liabilities in the condensed consolidated balance sheets. Changes in fair value of contingent consideration, including accretion, are recorded as selling, general, and administrative expenses in the condensed consolidated statements of income and comprehensive income.

The following table represents the changes to our contingent consideration liabilities:

			SES						BIG						Total
Balance at December 31, 2021			$	19.1					$	2.1					$	21.2
Decrease in fair value of contingent consideration liabilities			(0.5)						(0.3)						(0.8)
Balance at March 31, 2022			$	18.6					$	1.8					$	20.4

The components of accumulated other comprehensive loss are as follows:

			Foreign currency translation adjustments						Pension liability adjustments, net of taxes						Accumulated other comprehensive loss
Balance at December 31, 2021			$	(15.2)					$	(6.5)					$	(21.7)
Other comprehensive loss			(6.1)						—						(6.1)
Amounts reclassified from accumulated other comprehensive loss, net of income taxes			—						0.1						0.1
Net current-period other comprehensive (loss) income, net of taxes			(6.1)						0.1						(6.0)
Balance at March 31, 2022			$	(21.3)					$	(6.4)					$	(27.7)

			Foreign currency translation adjustments						Pension liability adjustments, net of taxes						Accumulated other comprehensive income (loss)
Balance at December 31, 2020			$	13.8					$	(11.4)					$	2.4
Other comprehensive loss			(19.6)						—						(19.6)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes			—						0.4						0.4
Net current-period other comprehensive (loss) income, net of taxes			(19.6)						0.4						(19.2)
Balance at March 31, 2021			$	(5.8)					$	(11.0)					$	(16.8)

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

			Three Months Ended March 31,
			2022						2021
Net income attributable to Chart Industries, Inc.			$	10.2					$	25.6
Earnings per common share – basic:
Basic			$	0.28					$	0.72
Diluted			$	0.25					$	0.63
Weighted average number of common shares outstanding – basic			35.83						35.55
Incremental shares issuable upon assumed conversion and exercise of share-based awards			0.24						0.33
Incremental shares issuable due to dilutive effect of convertible notes			2.56						2.57
Incremental shares issuable due to dilutive effect of warrants			2.16						2.17
Weighted average number of common shares outstanding – diluted			40.79						40.62

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

									Three Months Ended March 31,
															2022						2021
Share-based awards															0.14						0.06
Convertible note hedge and capped call transactions (1)															2.56						2.57
Warrants															—						—
Total anti-dilutive securities															2.70						2.63

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

Income tax expense of $2.1 and $3.1 for the three months ended March 31, 2022 and 2021, respectively, represents taxes on both U.S. and foreign earnings at a combined effective income tax rate of 16.5% and 10.7%, respectively.

The effective income tax rates of 16.5% for the three months ended March 31, 2022 differed from the U.S. federal statutory rate of 21% primarily due to income incurred by some of our foreign operations for which no detriment was recorded, partially offset by the effect of income earned by our certain foreign entities being taxed at higher rates than the U.S. federal statutory rate and excess tax benefits associated with share-based compensation.

The effective income tax rates of 10.7% for the three months ended March 31, 2021, differed from the U.S. federal statutory rate of 21% primarily due to losses incurred by certain of our foreign operations for which no benefit was recorded, 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 excess tax benefits associated with share-based compensation.

As of both March 31, 2022 and December 31, 2021, we had a liability for gross unrecognized tax benefits of $1.7. This amount includes $1.2 of unrecognized tax benefits as of March 31, 2022 and December 31, 2021, which if ultimately recognized, would reduce our annual effective income tax rate. We recognized interest and penalties of $0.3 related to uncertain tax positions in income tax expense as of March 31, 2022.

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During the three months ended March 31, 2022, we granted 0.03 stock options, 0.04 restricted stock units and 0.01 performance units. The total fair value of awards granted to employees during the three months ended March 31, 2022 was $10.5. In addition, our non-employee directors received stock awards with a total fair value of $0.2. During the three months ended March 31, 2022, participants in our stock option plans exercised options to purchase 0.02 shares of our common stock.

Stock options generally have a four-year graded vesting period. Restricted stock and restricted stock units generally vest ratably over a three-year period. Performance units generally vest at the end of a three-year performance period based on the attainment of certain pre-determined performance condition targets. During three months ended March 31, 2022, 0.05 restricted stock and restricted stock units vested and 0.02 performance units vested.

Share-based compensation expense was $3.3 and $3.4 for the three months ended March 31, 2022 and 2021, respectively. Share-based compensation expense is included in selling, general, and administrative expenses in the unaudited condensed consolidated statements of income and comprehensive income. As of March 31, 2022, total share-based compensation of $17.0 is expected to be recognized over the weighted-average period of approximately 2.6 years.

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, believe we are currently in substantial compliance with all known environmental regulations. At March 31, 2022 and December 31, 2021, we had undiscounted accrued environmental reserves of $0.1 and $0.2, respectively.

Legal Proceedings

Stainless Steel Cryobiological Tank Legal Proceedings

In connection with the October 1, 2020 divestiture of our cryobiological products business, Chart retained certain potential liabilities, including claims in connection with our following litigation. 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. In May and June of 2021, the first five of the federal lawsuits went to trial, and on June 10, 2021, the jury reached a verdict against Chart in favor of the plaintiffs in those lawsuits in the amount of $14.9, of which 90% ($13.5) is attributable to Chart. On August 13, 2021, judgment was entered, and on September 10, 2021, we filed two post-trial motions: a motion for a new trial and a renewed motion for judgment as a matter of law. The motion for new trial or, in the alternative, request for remittitur, sought, among other relief, to have the court grant a new trial because of erroneous evidentiary rulings, a factually unsupported negligence claim, plaintiffs’ attorney misconduct, allocation of fault that was not supported by the record, and excessive noneconomic damages. The renewed motion for judgment as a matter of law sought to have the court direct judgment for Chart on the negligent failure to recall claim because of our contention that plaintiffs failed to present sufficient evidence to prove each element of that claim. On November 5, 2021, the court denied these post-trial motions. Chart filed its notice of appeal on December 1, 2021. On December 7, 2021, the court stayed the remaining federal lawsuits pending resolution of Chart’s appeal.

In the second quarter 2021, we recorded a loss contingency accrual and corresponding charge to net income for $13.5 in the amount of the jury verdict attributable to Chart. The loss contingency accrual is included in other current liabilities in our unaudited condensed consolidated balance sheet at March 31, 2022. Chart expects that any potential loss associated with the verdict will be covered by existing product liability insurance, subject to previously issued reservations of rights by the insurance carriers. Accordingly, we have recorded an offsetting $13.5 loss recovery receivable with a corresponding credit to net income. The loss recovery receivable is included in other current assets in our unaudited condensed consolidated balance sheet at March 31, 2022. Although we continue to vigorously contest the result in this case, we continue to recognize the loss contingency accrual and related loss recovery receivable in our unaudited condensed consolidated balance sheet at March 31, 2022.

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Currently there are 164 individual cases (excluding the first five cases from the May/June 2021 trial) with respect to the Pacific Fertility Center incident on the docket in the U.S. District Court for the Northern District of California. In addition to the cases filed in the U.S. District Court for the Northern District of California, Chart is currently a defendant in 53 individual cases in the San Francisco Superior Court.

We have asserted various defenses against the claims in the lawsuits, which remain in various stages of development, 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 continue to evaluate the merits of such claims for each specific case in light of the information available to date regarding use, maintenance and operation of the tank that was sold to the Pacific Fertility Center. The Company has initiated negotiations with certain representatives of the plaintiffs to ascertain whether a preliminary settlement framework, acceptable to all constituent parties, for these fertility clinic cases can be reached. There remains substantial uncertainty with respect to the potential for a settlement. As such, we have not reached a conclusion that losses in these cases are currently probable. Based on the status of the settlement negotiations, the ongoing status of the various lawsuits, and the consideration of insurance coverage, we estimate that losses of up to approximately $50.0 are reasonably possible.

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, including the Pacific Fertility Center cases described above, will not have a material adverse effect on our financial position, liquidity, cash flows, or results of operations, except that our results of operations for any particular reporting period may be adversely affected by any potential or actual loss that is accrued in such period. Future developments may, however, result in resolution of these legal claims in a way that could have a material adverse effect.

Restructuring costs of $0.1 for the three months ended March 31, 2022, were primarily related to moving and employee severance costs relative to restructuring at our Beasley, Texas, Houston, Texas and Tulsa, Oklahoma facilities. Restructuring costs of $0.7 for the first three months of 2021 were primarily related to headcount reductions and facility relocation and moving expenses associated with a transfer of operations from our Tulsa, Oklahoma facility to our Beasley, Texas location. This project was a cost reduction measure within our Heat Transfer Systems segment to continue to structure the business for profitable growth and capacity efficiency.

We are closely monitoring our end markets and order rates and will continue to take appropriate and timely actions as necessary.

The following table summarizes severance and other restructuring costs, which includes employee-related costs, facility rent and exit costs, relocation, recruiting, travel and other:

			Three Months Ended March 31,
			2022						2021
Severance:
Cost of sales			$	0.1					$	—
Selling, general, and administrative expenses			(0.1)						0.3
Total severance costs			—						0.3
Other restructuring:
Cost of sales			0.1						0.4
Selling, general, and administrative expenses			—						—
Total other restructuring costs			0.1						0.4
Total restructuring costs			$	0.1					$	0.7

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The following tables summarize our restructuring activities:

			Three Months Ended March 31, 2022
			Cryo Tank Solutions						Heat Transfer Systems						Specialty Products						Repair, Service & Leasing						Corporate						Consolidated
Balance at December 31, 2021			$	0.4					$	0.5					$	—					$	1.4					$	—					$	2.3
Restructuring charges			—						0.1						—						—						—						0.1
Cash payments and other			(0.3)						(0.6)						—						—						—						(0.9)
Balance at March 31, 2022			$	0.1					$	—					$	—					$	1.4					$	—					$	1.5

			Three Months Ended March 31, 2021
			Cryo Tank Solutions						Heat Transfer Systems						Specialty Products						Repair, Service & Leasing						Corporate						Consolidated
Balance at December 31, 2020			$	0.5					$	0.2					$	—					$	—					$	0.1					$	0.8
Restructuring charges			0.3						0.4						—						—						—						0.7
Cash payments and other			(0.3)						(0.6)						—						—						(0.1)						(1.0)
Balance at March 31, 2021			$	0.5					$	—					$	—					$	—					$	—					$	0.5

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