Chart Industries: A Catalyst for the Hydrogen and LNG Infrastructure Boom

The global clean energy transition is reshaping industries, and Chart Industries (NYSE: GTLS) stands at the nexus of this transformation. As governments and corporations accelerate decarbonization efforts, demand for hydrogen and liquefied natural gas (LNG) infrastructure is surging. Chart's Q2 2025 earnings, building on its strong Q1 performance, underscore its position as a critical supplier to this $1.3 trillion energy infrastructure market. Here's why investors should take note.

Hydrogen Infrastructure Growth: A Strategic Win

Chart's Specialty Products segment—a key driver of its clean energy strategy—reported a 24.6% year-over-year jump in orders in Q1 2025, fueled by record demand for hydrogen infrastructure projects. The segment's sales rose 16.7% to $276.1 million, while gross margins soared to 30.3%, the highest since Q3 2022. This improvement reflects operational efficiencies at its Theodore, Alabama facility and stronger pricing on hydrogen-related contracts.

A standout achievement was the first serial run order for HLNG vehicle tanks with Volvo-Eicher, marking a milestone in hydrogen adoption for transportation. This partnership signals Chart's ability to capitalize on the $32 billion hydrogen mobility market, which is expected to grow at a 14% annual clip through 2030. Management emphasized that April 2025 demand remained robust, with hydrogen projects contributing to a projected Q2 book-to-bill ratio above 1.0, indicating orders are outpacing sales.

LNG Infrastructure: Anchored in Long-Term Contracts

Chart's LNG business, through its Heat Transfer Systems (HTS) and Cryo Tank Solutions segments, is benefitting from rising global demand for cleaner-burning natural gas. A $1.32 billion order backlog as of March 2025 includes major projects like the Woodside Louisiana LNG Phase Two, which will supply 10 million metric tons of LNG annually.

The HTS segment, which provides heat exchangers for LNG liquefaction and regasification terminals, saw sales rise 5.4% YoY to $267.3 million. Meanwhile, the Cryo Tank segment—despite a 4.2% YoY dip in orders—reported sequential growth, driven by backlog conversions for rail and marine LNG carriers.

Strategic Advantages: Backlog, Diversification, and ESG Focus

Chart's $5.14 billion record backlog (up 13% from Q1 2024) offers visibility into its future revenue. This includes $2.06 billion tied to hydrogen and clean energy projects, ensuring stability even amid macroeconomic uncertainty. The company's global footprint—64 manufacturing locations and 50+ service centers—allows it to mitigate regional supply chain risks, such as tariffs.

ESG alignment is another key driver. Chart's “Nexus of Clean” strategy—clean power, water, food, and industrials—resonates with institutional investors prioritizing sustainability. The firm's 30.3% gross margin in Specialty Products highlights its ability to monetize ESG-driven demand.

Risks and Mitigation Strategies

Trade policy remains a wildcard. Chart estimates a $50 million tariff impact in 2025, primarily on U.S. industrial gas exports. To counter this, the company is:
- Diversifying supply chains: Leveraging regional manufacturing hubs to avoid reliance on a single trade corridor.
- Locking in material costs: Securing prices for raw materials in existing contracts.
- Passing costs to customers: Through price adjustments, with ~36% of revenue coming from recurring aftermarket services, which are less sensitive to tariffs.

Financial Health and Growth Prospects

Chart's Q1 results reaffirmed its full-year guidance: $4.65–4.85 billion in sales and $1.175–1.225 billion in adjusted EBITDA. Free cash flow is on track to exceed $550 million, enabling debt reduction and capital returns.

Investment Considerations

• Valuation: At a forward P/E of 20.21, Chart trades at a discount to peers like Air Products (APD) or Linde (LIN). Its PEG ratio of 0.57 suggests strong growth potential relative to valuation.
• Upside Catalysts:
• Execution on the Woodside LNG project and other backlog orders.
• Scaling of HLNG vehicle tanks for commercial transport.
• ESG-driven demand for decarbonization infrastructure.
• Downside Risks:
• Delays in LNG project approvals due to geopolitical tensions.
• Slower-than-expected hydrogen adoption in key markets like Europe.

Conclusion: A Buy for the Long-Term Clean Energy Play

Chart Industries is a rare pure-play on the $500 billion hydrogen infrastructure market and the $250 billion LNG expansion pipeline. Its Q2 results, when reported on July 31, are expected to show sustained momentum in both segments. While tariffs and macroeconomic headwinds pose near-term risks, Chart's backlog, diversification, and operational discipline position it to thrive in the decade-long clean energy transition.

Investors seeking exposure to decarbonization infrastructure should consider Chart Industries as a core holding. Monitor its Q2 earnings for further clarity on execution and margin trends.

Disclosure: The author holds no positions in Chart Industries or related companies.