Chart Industries, Inc. (GTLS) Q4 2022 Earnings Call Transcript

Chart Industries, Inc. (NYSE:GTLS) Q4 2022 Results Earnings Conference Call February 24, 2023 8:30 AM ET

Company Participants

Jillian Evanko - President and Chief Executive Officer

Joe Brinkman - Vice President and Chief Financial Officer

Conference Call Participants

Chase Mulvehill - Bank of America

Sam Burwell - Jefferies

Martin Malloy - Johnson Rice & Company, LLC

Eric Stine - Craig-Hallum Capital Group

Marc Bianchi - Cowen and Company

Pavel Molchanov - Raymond James

Craig Shere - Tuohy Brothers

Robert Brown - Lake Street Capital Markets, LLC

Walter Liptak - Seaport Global Securities

Operator

Good greeting and invited to nan Chart Industries, Inc. 2022 Fourth Quarter and Full-Year Results Conference Call. All lines person been placed connected shut up to forestall immoderate inheritance noise. After nan speakers' remarks, location will beryllium a question-and-answer session. The company's merchandise and supplemental position was issued earlier this morning. If you person not received nan release, you whitethorn entree it by visiting Chart’s website astatine www.chartindustries.com. A telephone replay of today's broadcast will beryllium disposable pursuing nan conclusion of nan telephone until Friday, March 3, 2023. The replay accusation is contained successful nan company's property release.

Before we begin, nan institution would for illustration to punctual you that statements made during this telephone that are not humanities facts are forward-looking statements. Please mention to nan accusation regarding forward-looking statements and consequence factors including successful nan company's net merchandise and latest filings pinch nan SEC. The institution undertakes nary responsibility to update publically aliases revise immoderate forward-looking statement.

I would now for illustration to move nan convention telephone complete to Jill Evanko, Chart Industries CEO. You whitethorn begin.

Jillian Evanko

Thank you, Justin. And acknowledgment everybody for joining america this morning. With maine coming is Joe Brinkman, our CFO. And together, we will locomotion done nan position that was released this morning.

While nan platform has galore updates that tin beryllium reviewed astatine your convenience, our general remarks coming will attraction connected our 2023 outlook, our grounds 4th fourth and afloat twelvemonth 2022 results, nan existent operating environment, galore tailwinds that some Chart and Howden are experiencing, and nan position connected nan closing of our pending Howden acquisition.

Before we get into our 2022 results and really they springboard america into our reiterated 2023 outlook, statement that everything included successful nan supplemental position and our general remarks coming relates to continuing operations.

We person reached a preliminary colony successful nan Pacific Fertility Clinic litigation matter related to our 2020 divestiture of our Cryobio business. And arsenic noted successful nan property release, this will beryllium included successful discontinued operations. We were very pleased to put this section from our anterior divestiture down america and resoluteness these 217 cases. More specifics regarding nan colony will beryllium included successful our 10-K filing.

Starting connected descent 4, we reiterate our Chart standalone outlook for 2023 for income successful nan scope of $2.1 cardinal to $2.2 billion. We are assured successful this scope fixed our beardown visibility and further supported by nan 5 items connected nan bottommost of nan slide.

First, it is not different for task gross to displacement betwixt quarters. We expect realizing pushed 4th fourth 2022 gross successful 2023, but we did not summation our outlook for that timing shift.

Second, our outlook does not see immoderate further mid aliases ample task orders betwixt now and nan extremity of nan first half of 2023 which could supply further gross successful nan 2nd half of nan year.

Third, moreover though we are seeing extremity marketplace betterment successful HLNG conveyance vessel sales, our income forecast for those HLNG tanks is level pinch 2022.

Fourth, arsenic of nan extremity of 2022, we had grounds backlog of $2.3 billion, pinch astir 60% of nan afloat twelvemonth 2023 income outlook already successful backlog, higher than successful anterior years.

And finally, we person existing capacity to present connected our backlog and immoderate imaginable caller orders that could materialize passim nan year.

We are besides reiterating our erstwhile 2023 guidance associated pinch our anterior adjusted non-diluted net per stock outlook, which was a 2023 standalone full-year balanced adjusted EBITDA of $440 cardinal to $480 million, which you see.

We will beryllium utilizing EBITDA arsenic a financial metric going forward. In ray of adjustments, costs and adaptable metrics and timing associated pinch nan Howden acquisition, we will not supply standalone Chart adjusted net per non-diluted stock for 2023. Yet pursuing nan adjacent of nan Howden acquisition, we will supply updated mixed institution guidance for nan almanac twelvemonth 2023 for sales, adjusted diluted net per share, EBITDA and adjusted free rate flow. All of nan existent stock count and liking accusation arsenic of now is included successful nan supplemental presentation.

Our adjusted 2023 full-year free rate travel is besides reiterated successful nan scope of $250 cardinal to $300 million, including our reiterated superior expenditure outlook of $60 cardinal to $65 million.

Effective successful nan results presented coming for nan 4th fourth of 2022, we are nary longer adjusting inventory items for free rate flow. Seasonally, arsenic successful past years, our first 4th is typically our lowest 4th of nan year, and we expect that normal first 4th seasonality successful 2023. Given this and nan timing of our backlog, we expect quarterly revenues, gross separator and operating margins to proceed to summation sequentially complete nan people of this year.

The locomotion successful nan mediate of this descent shows our backlog arsenic of nan extremity of 2022 that's disposable for 2023 income recognition, giving a beardown visibility to our year, arsenic good arsenic book and vessel for nan year, which is accordant pinch anterior year's book and vessel activity.

Moving to descent 5, this shows each of our segments and nan anticipated standalone year-over-year 2023 afloat twelvemonth growth. We person nan strongest backlog that we person ever had. And that supports assurance successful Heat Transfer Systems, Specialty Products and Cryo Tank Solutions outlook.

In Repair, Service and Leasing, lifecycle, which is our section work group, had nan largest bid period successful December of 2022 and continued pinch a beardown commencement to 2023 orders, supporting beardown first half 2023 RSL income and margin. One illustration is simply a caller section work bid for $2.6 cardinal successful nan Middle East.

We person included a conception successful nan platform connected descent 10 done 16 that provides specifics for extremity marketplace tailwind and their affirmative effect to Chart and Howden and moreover much truthful to nan operation of our companies together. We'll not walk clip connected this telephone coming connected those elaborate slides, but alternatively speak to an overview arsenic shown connected descent 6.

Not only do we arsenic Chart person our largest commercialized pipeline for nan adjacent 2 years, we besides person started 2023 very beardown from an bid perspective, pinch complete $285 cardinal successful orders successful January alone.

So, fto maine springiness a fewer marketplace information updates by segment. Related to HTS, we person seen much orders precocious related to cryoplants being built by midstream companies and we're seeing dependable turnaround activity successful petchem. Biofuel and renewable diesel activity continues pinch ample aerial cooler request and request pinch our LNG customers continues astatine robust levels. Small standard and floating LNG continued to beforehand pinch respective orders expected to beryllium released successful 2023. And we do besides expect further Big LNG activity this twelvemonth successful our bid books. This anticipation is not only for process exertion and equipment, it is besides for much opportunities for nitrogen rejection portion studies and imaginable NRU implementation orders.

Related to Specialty Products, successful hydrogen, we're seeing broader geographic penetration successful places specified arsenic Korea, China and Canada, arsenic good arsenic further subsegments, specified arsenic inferior powerfulness generation, for illustration nan power vault bid we conscionable received, arsenic good arsenic marine activity successful hydrogen picking up for retention and substance systems.

Multiple authorities backing programs are incentivizing partnerships for illustration nan US Department of Energy hydrogen hub consortiums, wherever we are besides good positioned arsenic is Howden for opportunities successful production, proscription and export projects. We're seeing expanding liking pinch dense work substance compartment trucks, driving request and bid activity for our hydrogen substance position instrumentality pinch aggregate customers.

In c seizure and storage, opportunities are increasing successful some size and quantity, driven by description of brewery and wineries customers, arsenic good arsenic description into newer segments specified arsenic limekilns, biogas, java and barren ice. CO2 shortages globally are driving contiguous demand, and our customers are now looking to move from our ample standard c seizure provender aliases engineering studies to existent CCUS works deployment, including our anticipation for first instrumentality orders successful nan adjacent term.

There's besides a helium shortage, which is driving a number of customers to move up pinch producing much volume, resulting successful america seeing a dense summation successful quotation activities for our helium process technology.

Food and beverage request is besides continuing its dependable summation and abstraction exploration has kicked disconnected 2023 pinch precocious request levels, a beardown chimney of projects and aggregate cardinal dollar positive orders.

Strength successful our h2o curen business continues arsenic our mean opportunity size is increasing, and we spot important Chart h2o opportunities for maturation up successful world regions wherever entree to cleanable drinking h2o and wastewater curen is now receiving authorities funding.

And for Cryo Tank Solutions, chiefly related to business gas, our customers successful this marketplace person told america that they person each budgeted for normal year-over-year maturation and orders are successful statement pinch that truthful acold successful 2023.

So, we included descent 7 to show immoderate of our 2023 year-to-date orders because it demonstrates not only these macro tailwinds conscionable described, but besides our continued wide based demand. I won't spell done everything here, but pointing retired conscionable a mates of these truthful acold successful 2023, including an bid for LNG systems pinch Wison Heavy Industries for $115 million, a floating LNG bid for brazed aluminum power exchangers for $19.5 cardinal and further POs for our liquid hydrogen and oxygen trailers, positive a h2o purification strategy for electrolyzer production.

We person very beardown commercialized activity successful c capture, arsenic I conscionable described nan marketplace tailwinds, some ample and small, pinch orders for fans for a awesome nonstop aerial seizure project, tanks and ORCAs for methane elimination, our first waste of Earthly Labs for CiCi Oaks units to a beverage distributor, and an expanded engineering activity pinch KAUST successful nan Middle East.

We announced our definitive statement to get Howden, a starring world supplier of ngo captious aerial and state handling products and services connected November 9, 2022, pinch an anticipated closing day successful nan first half of 2023.

Moving to descent 8, we completed our financing activities related to nan transaction successful December, wrong our antecedently stated anticipated blended weighted mean costs of indebtedness range. We person received clearances from all, isolated from 2 of our full required regulatory approvals. Pending receipt of these 2 remaining world regulatory approvals, we now expect that nan transaction could adjacent successful nan adjacent 5 days and are optimistic based connected accusation received arsenic precocious arsenic this greeting that it could adjacent earlier nan extremity of nan first 4th of 2023. As a reminder for each nan slides that mention to Howden successful this presentation, we're still pending those approvals earlier closing.

Both teams stay laser focused connected execution and Howden, for illustration Chart, continued to acquisition beardown request from galore macro tailwinds successful their extremity markets successful nan 4th fourth of 2022 and into nan first 4th of 2023. Our antecedently shared pro forma 2023 for nan mixed business outlook remains unchanged. Our position for nan 12 months pro forma adjusted 2023 EBITDA is astir $1 billion, inclusive of costs synergies, and we proceed to expect reaching our estimated pro forma nett leverage ratio target successful nan precocious 2x scope by nan extremity of 2024. We reiterate our financial argumentation arsenic antecedently laid retired and included successful nan appendix of nan deck.

We're presently pursuing divestitures of 2 merchandise lines related to nan mixed business. While location tin beryllium nary assurances of nan completion of aliases proceeds from these activities, we proceed to target a completion of these wrong nan adjacent 3 to six months, and proceed to expect mixed proceeds of astir $500 cardinal from these divestitures.

Slide 9 is simply a descent that we person shared antecedently and are including coming to reiterate our assurance successful nan mixed business 2024 outlook. And nan adjacent section, arsenic I referred to earlier, slides 10 done 16 are those elaborate extremity marketplace updates and nan affirmative effect nan nexus of cleanable extremity markets person connected Chart/Howden and nan mixed offering.

For now, let's move up to descent 18, Joe.

Joe Brinkman

Thanks, Jill. Slides 18 done 20 are updates connected our proviso chain, arsenic good arsenic our pricing strategies and actions. On descent 18, you tin spot our apical earthy worldly inputs, arsenic good arsenic nan world instrumentality freight index. We are backmost to extremity of 2020 levels for aluminum, c alloy and freight, while stainless alloy is retired of its highest range, but not backmost to pre-COVID levels.

Turning to descent 19, while we are not yet seeing consistency successful nan input costs, we are seeing amended readiness from nan proviso concatenation arsenic good arsenic tempering costs and expect that to proceed this year, barring nary unforeseen geopolitical events. We besides expect nan costs of power to beryllium much unchangeable this twelvemonth than successful nan anterior two.

First file of information from nan near manus broadside of nan descent is changing costs from January 31 of 2022 to January 31, 2023. You tin spot a diminution successful costs successful each three. The 2nd file shows nan variability wrong nan 2022 year. So while costs is tempering, we still must strategically root from our section and world proviso base.

With nan variability still successful play, we proceed to clasp our pricing practices that we person deployed nan past 24 months, arsenic good arsenic proceed to surgically summation value arsenic shown connected descent 20. We're besides continuing to support our surcharge. We person not seen this effect request to date.

I will now manus it backmost to Jill to screen nan adjacent section, our 4th fourth and afloat twelvemonth 2022 results.

Jillian Evanko

Both nan 4th fourth and full-year 2022 were records successful aggregate reported arsenic good arsenic adjusted metrics. As you tin spot connected descent 22, our afloat twelvemonth group humanities records successful reported backlog, orders, income and EBITDA arsenic good arsenic adjusted EBITDA. Additionally, not shown present is our afloat twelvemonth 2022 grounds reported gross profit and grounds reported operating income.

The bottommost statement of descent 22 shows 4th fourth of 2022 reported records, which see grounds backlog, sales, operating separator and EBITDA arsenic good arsenic nan adjusted metrics for some operating separator and EBITDA. We're pleased pinch each these records, and I americium besides very pleased pinch nan truth that each period successful nan 4th fourth of 2022 had some gross separator arsenic a percent of income and operating separator arsenic a percent of income sequentially summation pinch our exit complaint from December of reported gross separator arsenic a percent of income of 31%.

Slide 23 shows that our records are wide based, not conscionable 1 portion aliases conception of nan business driving nan maturation successful each area. For nan afloat year, each 4 segments had grounds sales, and 3 of nan 4 segments posted grounds orders, operating income and operating income arsenic a percent of sales.

Moving connected to descent 24, we had our 4 highest bid quarters successful our history successful 2022. The first 3 quarters of 2022 included Big LNG orders, nan first clip successful our history wherever we had aggregate Big LNG orders successful a year.

Fourth 4th orders were $525.9 cardinal and did not see immoderate Big LNG. This contributed to nan afloat twelvemonth 2022 bid maturation of 65.9%. Over-the-road conveyance vessel orders, which were impacted by nan higher earthy state value successful Europe successful 2022, declined 85% year-over-year. And erstwhile excluding some Big LNG and over-the-road tanks, full orders were up 37% arsenic shown connected nan past statement of nan array connected descent 24.

And arsenic mentioned antecedently connected anterior calls, mean orders per 4th for nan 5 years of 2016 done 2020 were $251 cardinal per quarter. For 2021 and 2022, ex Big LNG, mean orders per 4th were $479 million. We expect our baseline quarterly orders to beryllium astir $350 cardinal to $375 cardinal and tin summation successful immoderate fixed 4th from location depending connected mid to ample projects that get booked.

The bottommost of descent 25 is important to constituent out. Remember that we person our HLNG conveyance vessel for Class 8 dense work LNG trucks and we introduced our liquid hydrogen onboard vessel arsenic well. Prior to 2022, we sold nan HLNG tanks to only a fistful customers. While nan business was down past year, we still sold tanks to 16 different customers, 9 of whom were caller and 2 customers had purchased nan liquid hydrogen onboard tanks from us.

We judge our highly differentiated over-the-road vessel offering will beryllium a cardinal portion of our unsocial solution group for some LNG and hydrogen arsenic our partners commercialize their [indiscernible].

Even pinch nan diminution successful over-the-road conveyance tanks, we had grounds orders successful 2022, some pinch and without Big LNG, driven by a assortment of mini to mid-sized projects successful nan $15 cardinal to $50 cardinal range, arsenic shown connected descent 26. These are nan types of afloat solution projects that support little cyclicality arsenic we book much of them.

In nan 4th fourth of 2022, we booked New Fortress Energy's Fast4 and Fast5 projects arsenic good arsenic a $22 cardinal petchem task and a ample bid pinch a cardinal backstage abstraction motorboat company.

We besides received nan missive of intent for a hydrogen liquefier from a longtime business state customer, which is not yet booked into our backlog, but we do expect to book it successful nan first half of 2023. We besides presently person an progressive pipeline for 27 different hydrogen liquefier opportunities.

Fourth 4th and full-year 2022 were some records for sales. Slide 27 shows our 20% positive integrated growth, some for nan afloat twelvemonth arsenic good arsenic Q4 complete Q4 2021 connected nan array marked A. Even pinch nan 4% overseas speech headwinds, we grew 22.4% for nan afloat year.

Section B connected descent 27 shows nan 22.4% year-over-year income growth. And akin to orders, nan diminution successful income successful our short book and vessel over-the-road conveyance vessel income was 79%. Excluding that, our income for 2022 would person been an summation of 33.5% compared to nan afloat twelvemonth 2021, which was antecedently our highest income twelvemonth successful our history.

Table C walks done nan 4th fourth 2022 overseas speech headwind to income and circumstantial timing shifts of gross into 2023. One of this is mislaid business, and arsenic mentioned earlier, contributes to our assurance successful our reiterated income outlook scope of $2.1 cardinal to $2.2 cardinal for nan afloat year.

The grey container connected nan correct manus broadside of descent 27 shows that these grounds sales, some successful nan 4th fourth and nan afloat twelvemonth 2022, were broadly supported crossed aggregate extremity markets and aggregate products. Water, abstraction and c seizure each grew complete 100%, while hydrogen, aerial coolers, brazed and HTS systems each grew much than 47%.

Record reported operating income arsenic a percent of income for nan 4th fourth of 2022 of 13.6% is higher than immoderate play adjusted, arsenic you tin spot connected descent 28. And grounds adjusted operating income arsenic a percent of income of 17% was supported by nan sequential summation successful reported gross separator and operating separator successful each of nan 3 months of nan quarter.

Slide 29 shows our grounds 4th fourth of 2022 EBITDA of $102.1 cardinal aliases 23.1% arsenic a percent of sales. When adjusted for one-time items related to nan summation for nan revaluation of our finance successful Svante pursuing its waste of securities to further investors including Chevron, share-based compensation and nan non-recurring costs reflected successful adjusted operating income, adjusted EBITDA for nan 4th fourth of 2022 was $97.5 cardinal aliases 22.1%. of sales.

Reported 4th fourth 2022 non-diluted net per stock was $0.42 arsenic shown connected descent 30. When adjusted for one-time items chiefly related to Howden deal-related costs, financing, different integration costs and nan summation I conscionable described arsenic good arsenic our mark-to-market of our inorganic investments, 4th fourth adjusted non-diluted EPS was $1.67. Full-year 2022 reported non-diluted EPS of $2.21 is simply a humanities grounds arsenic is our adjusted non-diluted EPS for nan afloat twelvemonth of $4.69.

Slide 31 shows nan 4th fourth to 4th fourth 2021 to 2022 and afloat twelvemonth comparisons of adjusted EPS. The meaningful summation successful some of these periods is driven by conception operational capacity successful nan result, which is offset successful portion by taxation and interest.

Similarly, descent 32 shows nan Q3 2022 to Q4 2022 sequential adjusted EPS walk. Sequential operational improvements continued, while taxation was a sequential headwind.

Slide 33 shows nan 4th fourth of 2022 nett rate provided by operating activities of $30.5 cardinal and CapEx of $26 million.

Capital expenditures successful nan 4th fourth 2022 included acceleration of nan installation of our brazing furnace and accumulation line, our acold container rooftop description and putting much leasing fleet assets into service. Demand for our cores and acold boxes continues astatine grounds levels, some for LNG applications of each sizes, lipid and state applications arsenic good arsenic our specialty products, afloat solution offerings for hydrogen, h2o and c capture. We besides proceed to spot beardown commercialized activity for our modular leasing fleet, which is chiefly mobile carrier and ISO containers.

When adjusted for Howden related costs, financing costs and income adjustments, adjusted free rate travel for nan 4th fourth was $71.5 million. Pointing to nan correct manus broadside of descent 33, we did not set for nan 4th quarter's antagonistic overseas speech headwind, nan accelerated capacity superior conscionable described and for circumstantial customer receivables that came successful early January versus our anticipation into nan 4th quarter.

Slides 35 done 40 supply much conception specifications and opportunities ahead. Starting connected descent 35, this is our regular LNG opportunity outlook. And I constituent retired successful rows 1 and two, we person a caller world opportunity that arose since our past update. And successful statement three, our imaginable opportunity group has grown arsenic a consequence of nan world further imaginable project, arsenic good arsenic imaginable expanded scope connected others successful nan pipeline, including 4 dense hydrocarbon removal systems aliases NRUs, arsenic I described earlier.

We booked aggregate mini and floating standard projects successful 4th quarter, and we besides expect each sizes of LNG task request to proceed into 2023. We do expect further Big LNG orders successful nan year, though we person not included immoderate of those successful our outlook. And we expect 1 successful nan first half of 2023.

And though we don't show [indiscernible] for hydrogen, it's different extremity marketplace wherever nan commercialized pipeline is growing, including being successful various stages of conversations pinch 786 imaginable and existent hydrogen customers pinch complete 180 projects that we reasonably expect tin move to bid shape successful nan adjacent 3 years.

In 2022, we executed 30 individual Memoranda of Understanding pinch partners. And connected descent 36, you tin spot nan extremity marketplace split, further supporting wide based maturation ahead. 10 of these were expect executed successful nan 4th fourth 2022, including pinch Wison, VERBIO, Raven for CCUS and hydrogen, and Hydrozonix for h2o curen solutions.

We've already received orders from 13 of these partners to date. And truthful acold successful 2023, we person executed 3 caller agreements pinch further partners, including Nikola for hydrogen offerings and MoUs pinch Rotec for precocious travel reverse osmosis and h2o treatment, and pinch GenH2 to incorporated Chart instrumentality into their mini standard hydrogen liquefaction systems.

Our first of benignant orders are a differentiator for us. You've heard maine talk astir that previously. And successful 2022, we added 89 of these to nan bid book and 168 complete nan past 2 years. You tin spot a fewer of nan 4th fourth first-of-kind connected descent 37, including an grant from Guyana Water Incorporated for 2 projects to support nan h2o infrastructure inaugural successful Guyana.

We besides added 327 caller customers successful 2022. And that's shown connected descent 38. Contributing to these 327 were 4th fourth of 2022 orders from caller customers, including power vault, an bid from Yarmouth, Massachusetts for nan first ever Flourosorb h2o curen solution successful nan State of Massachusetts, and a pre-FEED study bid for SES cryogenic c seizure exertion for Carmeuse and a European [indiscernible] successful nan lime industry, an manufacture that we expect will quickly statesman to instrumentality c seizure utilization and retention solutions.

We've already seen repetition orders from 119 of our caller customers that we booked successful 2021 into 2022.

Joe Brinkman

Chart China, which is chiefly reflected successful our Cryo Tank Solutions segment, continues to group records, arsenic they did successful 2021 and surpassing galore of those successful 2022. As you tin spot successful descent 39, 2022 reported an adjusted operating income arsenic a percent of income for Chart China double compared to 2021. They booked nan highest number of ISO containers successful our history successful nan twelvemonth and did each of this very safely pinch nary accidents successful nan full year. Also, we are seeing expanding demand, successful peculiar successful LNG and business gas, successful China successful nan first weeks of 2023.

Also, our Repair, Service and Leasing conception is gaining steam, pinch beardown request coming retired of December and into January for section service, arsenic good arsenic continuing to grow our leasing fleet, which continues to supply our customers optionality and definite modular instrumentality that we person successful nan fleet.

We person signed 465 caller leases successful 2022, which is shown connected descent 40. We're besides pleased to denote our three-year maestro work statement pinch VERBIO for LNG conveyance fueling position attraction and monitoring and expect that we tin leverage Howden's aftermarket work and repair capabilities to grow these RSL maturation drivers moreover further.

Jillian Evanko

In nan conception starting connected descent 42, we'll supply a fewer updates astir Howden. Howden is privately held and we still person nan pending approvals I said of up of closing, truthful nan accusation present is focused connected nan operation of nan businesses and what they're experiencing successful nan markets, which akin to Chart, has very wide based demand.

As you tin spot connected descent 42, Howden complements our afloat solution offering via filling successful ngo captious instrumentality into nan portfolio, adding much and much options for our customers successful our existing extremity markets, and adding extremity markets and geographies that are sustainability oriented for which nan Chart offering tin instantly beryllium utilized via Howden's relationships.

Aftermarket work and repair, which is resilient done a cycle, will beryllium complete 30% of nan mixed business revenues, and that 30% is besides 42-plus-percent gross separator successful nan mixed business.

Post close, we'll proceed to study successful our 4 existent outer reporting segments that you tin spot connected descent 43. You tin spot connected this descent besides really people Howden fits into our segmentation and adds equilibrium to RSL compared to nan different segments.

Slide 44 is simply a page that we person shown antecedently and person included again arsenic it exemplifies nan entree that Howden provides to america successful these precocious maturation specialty extremity markets, driven by sustainability, CO2 and power resilient tailwinds.

Our specialty full addressable marketplace size increases meaningfully pinch nan summation of Howden arsenic shown connected descent 45. The adjacent word TAM shown present for nan coming 3 years are unchanged from what we showed successful our investor platform connected January 5, pinch Howden much than doubling our near-term specialty TAM. The caller accusation connected descent 45 is our anticipated CAGRs for nan longer word TAM by extremity marketplace category.

And for illustration Chart, Howden continues to spot beardown marketplace request for their solutions and products pinch galore wins crossed a assortment of nexus of cleanable applications. Slide 46 shows 4 of these caller wins, including diaphragm compressors for Atura Power's Niagara Hydrogen Centre successful Canada, arsenic good arsenic supplying a hydrogen compression solution for Shell's Holland Hydrogen 1 installation successful Rotterdam, which erstwhile complete will beryllium Europe's largest renewable hydrogen plant.

In different markets, Howden will instal a ventilation optimization strategy for Gold Fields South Deep golden excavation to support a safe moving situation and reducing nan mine's power consumption. There are galore different caller Howden wins which tin beryllium recovered connected their website.

Similar to Chart, Howden partners successful nan industry. Recent MOUs executed by Howden successful nan first period of 2023 see pinch Foreship and Hydrexia, arsenic shown connected descent 47. You tin publication nan specifications connected each, some of which are oriented to providing solutions for customers to trim their c emissions pinch Foreship focused connected nan marine manufacture and Hydrexia connected hydrogen mobility. We expect that some of these partnerships, amongst others, tin leverage Chart's capabilities successful marine and hydrogen station adjacent of nan acquisition.

And now, I'll manus it backmost to Brinkman to adjacent retired our prepared remarks.

Joe Brinkman

To reiterate what Jill said earlier, some Chart and Howden teams are focused connected delivering our commitments, and together we proceed to not only beryllium assured successful our expertise to present twelvemonth 1 costs and commercialized synergies, our teams person besides had nan opportunity to place much synergy potential.

While we are not adjusting our outlook for these, they person awesome visibility and actionability, which not only provides assurance to nan original figures, it adds further upside potential.

Some examples of these are shown connected descent 48, including galore further offices and different tract consolidation successful overlapping locations, resulting successful $25 cardinal positive successful imaginable synergies, nan expertise for Howden China to utilize our unit alloy for compression skids, our integer NDT X ray, each of which adds efficiencies arsenic good arsenic reducing extracurricular spend.

You tin besides spot nan commercialized opportunities are growing, including pinch customers successful sustainable fuels and marine that are moving connected e-methanol looking for full solution, process optimization and a reliable partner for each captious components that person approached america to talk partnering.

And successful nan last conception of our prepared remarks, Jill and I want to convey our One Chart squad members for their execution of a grounds year, not conscionable successful nan aggregate grounds financial metrics, galore certifications, arsenic shown connected descent 50, but successful our ongoing ESG efforts, which see having our lowest information incident complaint successful our history and complete 75% of our sites pinch nary accidents successful a twelvemonth aliases more. It is our 5,100 astonishing squad members that proceed to thrust our profitable maturation and do truthful pinch our bosom of innovation. We congratulate Andrea, Adam and Rachita for winning our 2022 Global Innovation title pinch their astonishing ideas arsenic shown connected descent 51.

It is these and galore different innovations that consequence successful our manufacture activity position, arsenic you tin spot connected descent 52. We want to congratulate some Chart and Howden teams for being named finalists for nan Hydrogen Technology of nan Year Award successful nan 2023 Hydrogen Future Awards, which recognizes companies for their exceptional performance, innovative creation and contributions to nan maturation and improvement of nan hydrogen industry.

Slides 53 and 54 laic retired immoderate of nan activities and accomplishments of some Chart and Howden successful ESG, some internally and for our respective customers. Chart's yearly sustainability study will beryllium released successful April of 2023. And we are reiterating our committedness to reducing our c strength 30% by 2030 compared to our 2020 baseline arsenic good arsenic pledging c neutrality by 2050, inclusive of nan pending Howden acquisition.

Now, Justin, please unfastened it up for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions]. And our first mobility comes from Chase Mulvehill from Bank of America.

Chase Mulvehill

Let's see. I conjecture nan first question. If we conscionable deliberation astir nan 2023 bid outlook, obviously, you gave a batch of affirmative commentary there, Jill, admit each nan color. I cognize 2022 was evidently an exceptional twelvemonth for orders. So possibly if you could benignant of springiness america immoderate – you gave america immoderate benignant of precocious level comments, but possibly puts and takes from a precocious level, what mightiness beryllium up, what mightiness beryllium down? And then, do you deliberation it's imaginable to clasp orders flat? I cognize that mightiness beryllium a large inquire because 2022 orders were really strong. Is it imaginable to benignant of clasp orders level erstwhile we look astatine 2023?

Jillian Evanko

Starting pinch 2022, arsenic you mentioned, it was an exceptional bid twelvemonth pinch our 4 highest bid quarters successful our history each being successful 2022. With that said, we've provided nan $620.7 cardinal of Big LNG orders. My commentary, fto maine commencement location connected Big LNG, is that we do expect to beryllium released and book much than 1 Big LNG bid successful 2022. I don't think, successful total, that it will beryllium $620 million, but it surely is expected to beryllium successful nan hundreds of millions of dollar sizes for nan Big LNG orders that we expect this year.

Then erstwhile you spell ex-Big LNG crossed nan board, arsenic you mentioned successful your question, our extremity markets are conscionable hitting connected each cylinders correct now. And so, I don't want folks to get excessively acold retired complete their seats, hence why we tried to springiness benignant of that level baseline of nan $350 cardinal to $375 cardinal a quarter. But we are seeing much and much activity successful these mini standard and mid-scale projects of nan $15 cardinal to $50 cardinal range. I provided nan $285 cardinal January period purposely, truthful that folks tin effort to hone successful connected really they spot nan first 4th shaping up. We don't expect immoderate of our non-Big LNG extremity markets successful 2023, from an bid book perspective, to decline.

With that said, I deliberation we've indicated nan HLNG conveyance tanks, and we've forecasted that arsenic flat. We're starting to spot immoderate extremity marketplace improvements there. So that's astir apt 1 of nan ones that I modeled arsenic a slower grower. And successful our accepted lipid and state and power business, we've seen an uptick successful activity successful nan past six months aliases truthful and nan twelvemonth has started retired beardown arsenic good successful that bid book. That is astir apt nan 1 different marketplace I'd constituent retired that does person immoderate variability astir what you spot successful nat state pricing and successful nan value of lipid driving customers' CapEx behavior.

So each successful all, we would expect ex-Big LNG, nan bid book to beryllium up this year.

Operator

And our adjacent mobility comes from Eric Stine from Craig-Hallum. Eric, your statement is open.

And our adjacent mobility comes from Sam Burwell from Jefferies.

Sam Burwell

Actually, I wanted to inquire different 1 connected nan large LNG broadside and admit nan colour that you gave astir that to this point. But nan projects, astatine slightest successful nan US, that are astir apt astir apt to FID adjacent word are each of nan much accepted larger standard train assortment and not modular train projects. So I was wondering, does that connote that you guys are assured that you tin triumph marketplace stock for that type of LNG project? I'm conscionable funny for colour connected your outlook for winning caller large LNG projects going guardant that mightiness perchance beryllium different from nan worldly that you've done for Cheniere Venture Global?

Jillian Evanko

Let maine start. Let maine measurement backmost and commencement pinch a broader LNG – Big LNG comment, successful that we person some nan IPSMR, IPSMR positive process technologies arsenic good arsenic nan equipment. So we tin waste that arsenic a package pinch nan process aliases nan instrumentality that goes into, for illustration you described, nan larger standard assortment that doesn't usage nan mid-scale process exertion that we offer. So we are bullish connected existing customers that we person doing description s aliases caller builds. So I won't spell into circumstantial customer names, but surely much than 1 of our existing customers is giving awesome that they're going to do much projects ahead.

And then, connected nan ample standard that don't usage IPSMR process technology, we do expect contented that ranges from aerial cooled power exchangers to pretreatment, which could usage a brazed aluminum power exchanger and acold container arsenic good to guidelines successful a assortment of different associated vacuum insulated pipe, et cetera.

With each that said, an instrumentality style only bid for those types of projects tin scope from $50 cardinal to a mates of 100 cardinal dollars per project. Depends connected nan size, et cetera.

So, each successful all, we person a beautiful wide opportunity group connected nan Big LNG, ranging from conscionable nan instrumentality done to nan process technology.

Sam Burwell

Follow up connected hydrogen. No orders successful nan quarter, though I spot you called 1 retired that's imminent. And then, year-to-date, it looks for illustration you did, like, adjacent to $65 cardinal of orders. Curious, of those that you telephone retired connected descent 7, speech from nan South Korea 1 that's obvious, like, were each those successful nan US? Just trying to gauge, really has nan IRA been digested by customers frankincense far? Are they still trying to activity done each nan nuances earlier they FID aliases afloat underwrite a task and past nonstop an bid into you guys? Do you expect that erstwhile it's amended digested that hydrogen orders tin accelerate and go much accordant 4th to 4th arsenic we move forward?

Jillian Evanko

Yes. I'll return your mobility successful 2 parts. The first is year-to-date, and this is arsenic of a mates of nights ago, we were astir $69 cardinal successful hydrogen related orders. And then, conscionable nan past night, I deliberation we're adjacent to finalizing $6 cardinal to $7 cardinal further hydrogen bid connected apical of that.

In position of nan 2nd portion of your mobility connected nan geographies and past nan IRA and really that's impacting, we're seeing – obviously, for illustration you said, nan South Korea, I put that connected a slide, successful particular, because that's an absorbing 1 wherever we're really providing that solution and building that retired of Chart China. We tin build that vessel successful US, successful India, arsenic good arsenic successful China. So we've seen a bully expertise to geographically deed these extremity markets successful a costs effective measurement connected wherever we build what.

That decidedly is nan largest percent of our orders successful 2022 for hydrogen. And to commencement 2023, our North American – I opportunity North American versus nan US because Canada has been beautiful progressive arsenic well.

The IRA, I would say, is decidedly generating an progressive commercialized pipeline pinch respect to hydrogen, h2o and CCUS. I deliberation it's showing up successful our bid book to day much truthful successful CCUS than it is successful hydrogen, but that we would expect to spot that accelerate successful 2023, successful particular, arsenic customers that are not your accepted hydrogen users, for illustration your business state guys, but much of nan hydrogen circumstantial customers, digest really nan in installments strategy and nan stimulus costs work, whether you tin stack nan credits if you do aggregate different combinations of CCUS and hydrogen together arsenic an example, arsenic good arsenic nan IRS requirements and really that useful pinch nan IRA.

The past point I would adhd to that answer, Sam, is that we are good positioned, successful particular, for hydrogen successful nan United States pinch our brazed aluminum power exchanger manufacturing, being we're nan only institution successful nan world that manufactures brazed successful nan United States. And nan IRA allows for further use for customers that acquisition made successful America equipment. So that's a bully backdrop tailwind connected nan IRA arsenic well.

Operator

And our adjacent mobility comes from Martin Malloy from Johnson Rice & Company.

Martin Malloy

I wanted to inquire astir – it's been a mates of months since nan Howden acquisition was announced. Could you possibly talk astir your grade of assurance successful really it whitethorn person improved aliases changed successful position of some nan costs synergies arsenic good arsenic nan commercialized synergies? And past wanted to effort to get an thought of nan grade to which nan commercialized synergies person been incorporated into nan [indiscernible] and nan expectations there?

Jillian Evanko

And I tin show you we arsenic a team, mixed squad astatine Chart arsenic good arsenic nan Howden team, are truthful excited astir this combination. I was, arsenic you're good aware, ace convicted erstwhile we announced this connected nan strategical merits and nan financial merits of this transaction. I person moreover much conviction, if that's possible, coming retired of nan past mates of months astir nan commercialized and nan costs synergies and nan operation of this afloat solution offering. And we've had customers, various customers from some businesses, travel talk to america about, hey, what tin we do pinch you together because together you connection a existent afloat solution to reside things for illustration e-methanol, arsenic an example, for marine customers. We've had galore marine customers that want to activity pinch america connected partnering for cleaner and greener solutions arsenic an example.

But I besides person had nan opportunity and our full executive unit has had nan opportunity to activity together pinch nan Howden squad and place further commercialized and costs synergies. And, Joe Br here, he benignant of led nan complaint connected that. So fto maine fto him respond successful detail.

Joe Brinkman

Just to adhd to that, I had nan opportunity to walk clip pinch nan Chart and Howden procurement synergy squad earlier this week successful Glasgow, Scotland, and reappraisal nan opportunity chimney for our procurement synergies. I was very pleased to spot that it exceeds what we've guided frankincense far, astatine slightest from an opportunity pipeline. So very optimistic connected our expertise to deed that target from an execution standpoint. Also reviewed immoderate of nan installation consolidation synergies that I mentioned successful nan prepared remarks. And that looking very attractive. So, each steam up present connected synergies.

Jillian Evanko

And nan different point I'd add, Marty – different 2 things I would adhd are that we did not summation nan number that we put retired location compared to what we announced successful November. But it gives america much and much assurance successful delivering nan numbers that we've committed to successful our first twelvemonth of ownership. And we laid retired connected 1 of nan early slides successful nan supplemental presentation, our anticipated first period of contiguous annualized savings and past our position connected nan first six months, which we person nonstop statement of show connected nan actions associated pinch those synergies. So ace excited. And also, arsenic I commented, optimistic that we get this woody closed present earlier nan extremity of nan first quarter.

Martin Malloy

For my follow-up question, I wanted to inquire astir nan input costs connected descent 18. And possibly you could conscionable talk a small spot astir what that intends for you all, some successful position of margins, task economics for your customers, and past besides possibly moving capital.

Jillian Evanko

As we commented connected descent 18, we are pleased pinch nan readiness of our main worldly input costs, arsenic good arsenic nan inclination we've seen successful nan tempering of those three. And nan measurement we've built nan forecast is assuming that wherever we beryllium coming is wherever nan input costs proceed to beryllium for nan year. So further tempering would beryllium a positive.

In summation to that, arsenic Brinkman mentioned successful our prepared remarks, we are holding value and we do intend to reside circumstantial surgical value increases further arsenic we get done 2023. And we've already done immoderate of that successful January of this year.

Joe, thing you want to adhd connected sourcing?

Joe Brinkman

Just arsenic we talked astir connected descent 18, decidedly seeing much stableness connected nan main input costs, chiefly nan metals there. And unforeseen events successful nan world tin set that. But correct now we're seeing stableness and amended availability, which is reinforcing our pricing attack and our separator betterment that we've already seen return clasp present and will proceed to return hold.

And past conscionable going backmost to nan erstwhile power comments, important insourcing opportunities related to nan Howden acquisition that are going to make further worldly costs retired moving guardant done these insourcing synergies. So, different affirmative for us.

Jillian Evanko

And each that ties to nan backmost extremity of your mobility of moving superior opportunity ahead. So, we've had inflated inventory levels successful 2021 and 2022, and we person bully statement of show of not needing to support those inflated levels successful 2023 and driving inventory reduction, arsenic good arsenic applying nan champion practices that Howden has had successful improving their moving superior arsenic a percent of income to nan Chart moving superior business.

So, each successful all, nan setup for 2023, we person bully visibility to nan input costs, bully visibility to nan request and nan sale, and truthful we consciousness assured successful being capable to present nan outlook that we've provided.

Operator

And our adjacent mobility comes from Chase Mulvehill from Bank of America.

Chase Mulvehill

I'll inquire my follow-up existent quick. And I conscionable want to inquire connected margins. Obviously, we tin backmost into nan separator number for 2023, which is simply a beautiful coagulated – strong, 21.5% astatine nan midpoint for EBITDA margins is what's implied successful your guidance. But tin I ask, specifically, connected specialty merchandise margins? In nan 4th quarter, they took a measurement down, but if I look astatine nan past fewer 4th quarters, they stepped out. I don't cognize if there's immoderate seasonality successful that. But it's is really benignant of nan mobility connected 2023 successful specialty merchandise margins. How should we beryllium reasoning astir margins successful 2023 for specialty products?

Jillian Evanko

You're perfectly correct successful in your implied 21.5% midpoint connected EBITDA and we consciousness really bully astir it. We are conscionable thrilled pinch wherever nan sequential margins went successful nan 4th fourth and being driven by nan operational broadside of nan business versus beneath nan statement items. So, each of that's a affirmative setup.

With that said connected nan specialty, you're correct. First of all, Q4 tends to beryllium that way, which is driven by nan book and vessel constituent of nan specialty business, but nan reality successful this peculiar Q4, if you compared to nan anterior Q4 of 2021, nan biggest driver was HLNG measurement change, which nan margins are bully connected that. But if you looked astatine it successful absolute Q4 of 2022, we had conscionable nether $10 cardinal of gross that was associated pinch first-of-a-kind task that really came successful wrong nan quarter. And we had taken that astatine little separator because we spot an unthinkable business opportunity up pinch that peculiar customer. So, that's reflected successful nan 4th quarter, arsenic good arsenic location were 2 hydrogen liquefier rev rec items that pushed retired from Q4 into 2023. That would person helped – that would person been successful higher margins than what we had before.

So connected specialty, we forecast nan HLNG, arsenic I commented, level successful 2023 to 2022. And truthful for nan afloat year, you were astatine astir 34% to 35.5% – we telephone it 34% to 35% for nan afloat twelvemonth specialty gross margin.

Operator

And our adjacent mobility comes from Eric Stine from Craig-Hallum.

Eric Stine

Obviously, beardown orders successful 4th fourth and you gave nan January number. Is location immoderate measurement to quantify whether existent aliases from a precocious level, what that number would look for illustration pinch Howden, fixed nan further content?

Jillian Evanko

As you said, we're very pleased pinch $526 cardinal of orders without immoderate Big LNG successful nan 4th quarter. So, we purposely wanted to nonstop those to guarantee they understood that it's not a sequential Q2 to Q3 to Q4 is not really a bad point successful position of really nan orders rolled retired successful 2022, but 4 of our highest bid quarters successful our history were successful that year. So I conscionable return nan first portion of your mobility to reiterate that $526 cardinal successful a 4th is beautiful darn good.

With that said, nan existent mobility you're asking connected what could it look for illustration pinch Howden. I'm incapable astatine this constituent to springiness you what their 4th fourth orders were. But I americium capable to opportunity that seeing very, very akin trends successful nan business and spot related to nan extremity markets that I've described. A very adjacent operation would beryllium to double it, to double ours. That would beryllium correct down nan fairway successful position of really you look up to nan 1 positive 1 together.

Now, further contented from nan operation thereof, we've sized twelvemonth 1 commercialized apical statement opportunity astatine $150 million. But nan measurement that I would deliberation astir further solution group bid book is astir apt an incremental 20% to 30% connected a afloat solution offering of bid size that we would get.

Eric Stine

I conjecture past my follow-up, conscionable curious, you're getting close, but immoderate thoughts connected early reception to nan deal, either from existing customers aliases immoderate of nan caller customers that you've identified for Chart?

Jillian Evanko

We person had exceptionally affirmative reception from existing customers, some Howden and Chart, arsenic good arsenic had immoderate opportunities for caller customers. Obviously, for illustration you said, we're successful that play betwixt motion and close, wherever we proceed to run arsenic individual businesses connected our own, but we tin immediately, retired of nan gate, return advantage of nan 1 world commercialized statement that we'll proceed to deploy successful nan mixed business. For me, it's beautiful neat to spot nan 2 companies and nan group moving together and nan ideas that person been generated betwixt nan 2 of them. And nan ideas are endless erstwhile you commencement looking astatine CCUS and h2o and hydrogen. So, I'm bullish that we're going to travel retired of nan gross strong, not conscionable connected nan synergy side, but conscionable seeing immoderate of these customers. And I deliberation our caller customer metric will turn successful 2023 compared to 2022 meaningfully, fixed nan combination.

And past for our income squad that hopefully is listening, they really committed to – without america having to push connected them committed to an exceptional summation – anticipation of nan mixed business successful nan bid book because they spot nan worth betwixt nan two.

So customers are excited astir nan combination, and they spot nan characteristic of having our cryogenic stationary instrumentality that successful almost each cases successful nan afloat solution requires rotating instrumentality pinch it. And this combination, location isn't immoderate different institution that has that operation of stationary and rotating instrumentality for these types of applications together.

Operator

And our adjacent mobility comes from Scott Gruber from Citi.

And our adjacent mobility comes from Marc Bianchi from Cowen.

Marc Bianchi

I conjecture I want to effort to unpack nan pro forma outlook a small bit. And past nan different mobility I had was conscionable benignant of connected nan nett indebtedness progression. So connected nan pro forma outlook for $1 billion, americium I reasoning astir it nan correct way? It seems obvious, but I conscionable want to corroborate that we're talking astir nan EBITDA guidance that you gave for a standalone Chart, afloat tally complaint of nan synergies, truthful $175 cardinal there, and past what looks for illustration nan Howden trailing 12 that we sewage erstwhile you first announced nan woody of for illustration $340 million. Am I interpreting that correctly?

Jillian Evanko

You are, Mark. Yeah, you're benignant of correct down nan fairway connected that. We we've sewage possibly Howden a small spot higher than that, but telephone it good. You're directionally correct connected it.

Marc Bianchi

If I were to conscionable to effort to estimate nan synergies that will really beryllium contributing to nan almanac 2023, obviously, it depends connected what clip nan woody closes, but if we presume 45 days, for illustration you said, what would that number look like? I was getting to thing that's for illustration $30 cardinal to $50 cardinal connected my head. But I don't cognize if you'd attraction to correct that.

Jillian Evanko

That's thing that we will springiness very circumstantial guidance erstwhile we close, truthful that it's highly clear. But I don't person immoderate rumor successful talking astir – we've already identified astir 20 positive cardinal dollars of benignant of period 1 annualized synergies that travel out. From a maturation position connected nan first six months aliases so, we've sewage astir an annualized $70 million, but you've sewage to nett immoderate costs pinch that. So, you'd beryllium much than safe successful nan $50 cardinal range.

Marc Bianchi

That's not an annualized number. We're talking astir actually, like, what would travel done nan P&L successful position of realization, right?

Jillian Evanko

Correct.

Marc Bianchi

The different 1 was conscionable connected nan nett indebtedness progression. So, you'll beryllium $4.2 cardinal astatine nan clip of nan close. And there's a batch of sound pinch nan free cash, arsenic you've discussed. So, possibly conscionable to deliberation astir nan rate progression successful a different way, wherever would you deliberation that that $4.2 cardinal exits 2023?

Jillian Evanko

Let maine make judge I reply what you want maine to reply present is, really do we deliberation of -- assuming we adjacent successful nan adjacent 30 to 45 days, what would we spot coming retired of almanac twelvemonth 2023 for our nett leverage ratio? Am I knowing correctly?

Marc Bianchi

Yeah. I'm asking astir it much connected an absolute nett dollars of nett indebtedness basis, that's benignant of really I was funny to perceive you respond. But if you're prepared to respond connected nett leverage, that works, too.

Jillian Evanko

We put retired successful nan – I deliberation it's successful nan January 5 platform arsenic good nan progression of what we'd spot benignant of coming retired of 2024, which is successful that precocious 2s range. We still spot that. And I cognize I'm not answering your 2023, we'd person to do immoderate circumstantial mathematics connected that. But I think, realistically, if I were backmost astatine nan enveloping, really we spot nan year's rate advancement and disposable for indebtedness salary down, we'd beryllium exiting 2023 location successful that benignant of debased 4s range.

Operator

And our adjacent mobility comes from Pavel Molchanov from Raymond James.

Pavel Molchanov

Two questions astir Europe. We're proceeding much and much astir this Green Deal business scheme to support cleanable tech manufacturing wrong nan European Union. And very timely, of course, pinch Howden. Can you conscionable tally done nan circumstantial products that you're going to beryllium manufacturing successful nan EU that perchance would suffice for immoderate of these subsidies?

Jillian Evanko

Thanks, Pavel, for pointing retired that opportunity group – because we look to mostly talk nan US IRA mostly and nan EU Green Deal business scheme is akin successful position of what we expect to deduce much commercialized opportunity wrong nan region.

And Howden manufactures galore of their products wrong nan EU, arsenic we do for Chart. And compressors, a assortment of compressors, including nan diaphragm and piston compressors that spell into these cleanable applications, inclusive of hydrogen, arsenic good arsenic nan steam turbine offering and nan fans offering. I deliberation nan Howden soil offering is certainly, successful our opinion, a marketplace leader for applications for illustration CCUS, successful particular, and there's going to beryllium a awesome opportunity to do that arsenic well. That's conscionable to sanction a few.

In summation to that, I don't want to disregard nan reply without talking to their integer uptime offering arsenic good arsenic nan arena sim integer offering that they person because we spot those arsenic being tied really intimately to nan EU Green Deal applications and nan expertise to show and nan expertise to instrumentality those successful summation to nan OEM equipment. So awesome opportunity ahead. And we haven't sized that yet because we want to spot immoderate of nan specifics of nan woody itself, but I deliberation that you're going to spot tailwinds akin to what we spot successful nan imaginable commercialized pipeline from nan IRA successful that region.

Pavel Molchanov

Following up connected Europe, circumstantial to Howden, presumably you'll beryllium going done immoderate benignant of installation consolidations, that benignant of thing. Have you started your speech pinch nan useful councils, labour [Technical Difficulty]? And if so, really is that speech progressing?

Jillian Evanko

I can't spell into specifics, Pavel, connected that. But I tin show you that we person regular dialogues pinch nan Howden team, arsenic good arsenic pinch play regular touch points pinch KPS Capital Partners who person been very supportive successful what we tin activity connected betwixt signing and closing. So we deliberation we're successful a bully position to travel retired of nan gross beardown to execute nan synergies arsenic good arsenic to return advantage of nan other effect, which is return advantage of nan folks that are ace cardinal talent that we spot doubling our engineering workforce arsenic an illustration connected time 1 and taking advantage of wherever these cardinal resources are located. So it's some parts of your question. It's not conscionable from synergy accomplishment and having dialogues pinch nan correct unit wrong Howden. That worldly is happening, but I can't spell into specifics astir useful councils.

Operator

And our adjacent mobility comes from Craig Shere from Tuohy Brothers.

Craig Shere

So, conscionable a follow-up connected Sam's LNG exertion question. I was frankly a small amazed Cheniere opted for larger standard bequest technology, train creation for nan Sabine description FERC filing, pre filing. And nan mentation seemed to beryllium on nan lines that I conjecture nan larger trains whitethorn tie little connected grid powerfulness that whitethorn person a higher vulnerability to ember generation. And I conjecture that was a twist I wasn't ever reasoning astir before. And possibly you could elaborate connected nan differences betwixt technologies successful position of powerfulness usage and drafting connected nan grid, nan readiness of soul generation, and really that each could play out, while everybody's trying to amended their c footprint.

Jillian Evanko

As I commented to Sam's question, we do expect having contented crossed each of these size projects, whether it's instrumentality aliases process technology. You person to benignant of look astatine nan full power depletion and besides look astatine our utilizing e-motor drives arsenic an illustration aliases gas. There's a batch of method components to that answer.

And I besides would opportunity that – truthful they tin each beryllium effective and they tin each person a assortment of different constructs that lick for those types of issues and challenges. So, I'd person to get you to our method feline to get you a really bully reply connected that, which we're happy to do offline. But pinch that said, aged exertion successful conjunction pinch nan different instrumentality that powers it tin beryllium and is arsenic effective erstwhile it comes to reducing nan c emissions footprint.

Again, you've sewage to really peel nan bulb backmost connected that answer. Do you person a dense hydrocarbon removal system? Do you person an NRU successful place? What's your state composition? Where's it coming from? Are you utilizing an electrical centrifugal drive? So, tons of questions that you'd person to really get into nan conception of nan facility.

I besides deliberation that there's elements to these assortment of operators' strategies, whether it's velocity to completion, description from an existing installation that already has a exertion successful spot and is working. So really do position changing that? What are nan costs associated pinch doing so? I deliberation there's a batch of economical factors that spell into those determination points arsenic well.

With each of that said, we consciousness for illustration we're really good positioned pinch nan operators and nan EPCs connected nan projects that I deliberation everyone successful nan nationalist domain is good alert are moving up successful nan coming twelvemonth and years and decades. And we really for illustration our position connected really we expect these orders to travel into nan bid book complete nan coming years, wherever it's not conscionable a 1 and done type of activity successful nan large LNG abstraction anymore.

Craig Shere

A benignant of a large image pinch Howden. As you tin astir apt understand from a caller study wherever we spot a batch of synergies, we deliberation location could beryllium awesome upside. It's crossed nan products, nan specialty markets, geographic regions, integration, each sounds great. What I want to wrap my caput astir is business model. And what I mean by that is, erstwhile we do nan math, fixed specified a ample aftermarket business astatine Howden pinch very ample margin, it seems nan remainder of their business is beautiful debased separator compared to not only Howden's aftermarket, but nan remainder of Chart. And since their instrumentality income look to tee disconnected their aftermarket, it almost sounds for illustration a razor leaf business exemplary that is benignant of different than what I ever thought of Chart's humanities approach. Am I reasoning astir that right? How does this sync?

Jillian Evanko

Joe Br is going to reply that for you.

Joe Brinkman

Just 1 point I would adhd aliases would talk to that is conscionable for illustration we've seen connected nan Chart side, nan operation of our specialty products is higher separator than our much accepted business products. And we're seeing nan aforesaid point pinch nan OEM portion of nan Howden business, wherever their solutions for specialty markets is generating higher margin. And that has started to return clasp and has very beardown tailwind to it moving forward. So we spot separator betterment for specialty markets connected their OEM equipment. And then, for illustration you rightly pointed out, it each pulls done aftermarket down nan road.

Jillian Evanko

And what we for illustration astir nan combination, arsenic good arsenic each nan galore things we've already said is, to Joe's point, erstwhile you're trading a afloat solution task to renewable customers, that afloat solution is different than a constituent waste of OEM connected nan specialty side, and we emotion nan expertise to propulsion done nan integer elements and nan footprint of work and repair nan other measurement done to nan Chart business that we didn't person arsenic beardown of a position arsenic they do.

Operator

And our adjacent mobility comes from Rob Brown from Lake Street Capital.

Robert Brown

I conjecture much colour connected nan hydrogen liquefaction benignant of task pipeline. We talked astir rather strong, I deliberation 27 projects successful nan pipeline. What's benignant of task size and what are nan benignant of limitations of those going forward?

Jillian Evanko

Thanks for picking up connected that stat because it is simply a beautiful beardown pipeline. And I deliberation it's going to grow. We don't needfully talk astir it each 4th of what that pipeline looks like. But what's bully astir nan existent conception of those discussions is that they're pinch a assortment of really wide group of customers, ranging from utilities arsenic an illustration to business state folks to pureplay hydrogen operators. So, we for illustration nan assortment of nan extremity markets these customers are in.

The size of these plants is starting to get larger. So what we would person talked astir successful 2021 and really for nan astir portion successful 2022 was 15 tonne per days, and started to spot 30 tonne per days. Now we're seeing 30 tonne per day, 32 tonne per days, moreover folks that are saying, okay, I want to do a 90 tonne per day, which whitethorn beryllium a conception of 3 30s arsenic an example. But nan size of these projects is getting larger connected an absolute basis, which successful move gives america much contented opportunity because, arsenic nan task gets larger, obviously, there's much that goes into that.

And nan different point I would opportunity that I want to spot create much is simply a modular size and a modular package. And our teams, our engineering teams are moving connected that correct now. Because I do deliberation that will facilitate expediting decision-making pinch customers versus everybody starting from their ain thought of what nan works should look like. So I deliberation there's a awesome opportunity arsenic good to accelerate nan bid book complete nan coming years pinch respect to a modular works size.

Operator

And our adjacent mobility comes from Walter Liptak from Seaport Research.

Walter Liptak

I wanted to inquire 2 speedy ones. One, location was immoderate gross that pushed from nan 4th fourth into 2023. I wonderment if you tin conscionable springiness america immoderate colour connected really overmuch and why and things for illustration that. And past 2nd connected nan gross margin, you guys called retired this up successful December. And wonderment if you could conscionable explain why that measurement up happened and are we going to spot that travel done into nan first quarter?

Jillian Evanko

Absolutely. Let maine commencement pinch your first. So, successful nan supplemental position connected – and I deliberation it was benignant of successful nan precocious 20s page number wise. We had a floor plan that described immoderate of nan gross that moved from Q4 into Q1. There were 3 main drivers connected that. And 1 of them, location were 3 circumstantial liquefier projects that are percent of completion revenue. And they had components that we had expected to person successful Q4, really successful nan period of December, that didn't travel successful from our proviso concatenation successful clip to beryllium capable to admit that revenue. That was nan largest bucket of nan shift. And those projects are good underway, truthful surely will beryllium successful 2023.

And then, nan 2nd class was astir timing of section work occupation deployment. What that really relates to is erstwhile we person a US section work unit that has to spell international, nan customer helps pinch nan timing astir erstwhile they want them astatine nan works for solution and their corresponding labor and squad members who tin beryllium there. And these are typically Middle East locations. So, if we get an bid for a section work project, it really does dangle connected erstwhile successful nan 4th that bid comes successful and erstwhile nan customer wants nan squad there. So successful this peculiar lawsuit of nan timing shift, nan bid came later successful nan 4th and past you had nan vacation timeframe, and truthful that shifted retired into 2023. That customer has our squad deployed, I judge that's successful – surely successful nan first half of this year.

And past nan 3rd was a customer that we expected a repair task of meaningful size. And that customer chose to spell pinch a replacement portion alternatively of nan section work repair. So, again, not mislaid business if we get a replacement portion order, but that would surely displacement nan timing retired of nan 4th quarter. So that's nan waste timing portion of your question.

And then, pinch respect to gross separator and our exit complaint from December, first of all, typically successful our quarters, nan backmost half of nan 4th is heavier connected gross and shipments. I don't deliberation that's really a Chart phenomenon. I deliberation that's astir apt conscionable a arena successful operations arsenic a whole.

But we had circumstantial task gross that was recognized successful December that was astatine higher margins. And we do expect that inclination to continue. I want to reiterate what I said successful my prepared remarks that our first 4th successful fundamentally each twelvemonth successful our history, pinch nan objection of one, is ever seasonally our lowest for conscionable metrics arsenic a whole. We don't expect thing different if you looked astatine 2023 and by quarter. But I americium assured that, arsenic nan twelvemonth progresses, you'll spot continued separator improvement, and Q1 will beryllium our lowest 4th of nan twelvemonth based connected what we spot coming and really backlog rolls retired and wherever we spot FX.

Operator

Thank you. And I'm showing nary further questions. I would now for illustration to move nan telephone backmost complete to Jill Evanko for closing remarks.

Jillian Evanko

Thanks, Justin. And arsenic Joe Brinkman said, I want to return conscionable a infinitesimal and convey our One Chart world squad members for an unthinkable 2022, a grounds 4th fourth and their execution to commencement 2023 and present nan commitments that we've laid retired today. Thank you, Justin.

Operator

This concludes today's convention call. Thank you for participating. You whitethorn now disconnect.