Chart Industries acquires L.A. Turbine
By Keefe Borden01 July 2021
Chart Industries acquired L.A. Turbine for $80 million in cash, subject to customary closing adjustments.
The acquisition of L.A. Turbine offers Chart customers a “one-stop shop” for a variety of applications including hydrogen and helium liquefaction, carbon capture and energy storage, industrial gas, natural gas processing, small-scale LNG plants, propane dehydrogenation (PDH) plants, heavy hydrocarbon removal process for LNG plants and petrochemical processes, Chart CEO and President Jill Evanko said.
L.A. Turbine (LAT) designs, engineers, manufacturers and tests turboexpanders for new and aftermarket equipment. Chart said it purchased LAT because it has the capability to manufacture a unique expander required for hydrogen and helium liquefaction which is difficult to obtain in the market due to a limited number of companies that are capable of designing and producing it, Evanko said.
For example, Evanko noted that LAT has the capacity to produce oil-free machines and experience with foil bearing design and magnetic bearings. “These very specialized expanders are difficult to design and produce as they require very high efficiency, in some cases oil-free machines, foil bearings for plants producing 10 tons per day and smaller, and magnetic bearings for larger helium and hydrogen liquefaction plants,” Evanko said.
Chart said that within the last three years, the other qualified suppliers have been acquired by companies that only use their hydrogen and helium turboexpanders for in-house dedicated purposes. In August 2018, Air Products bought Rotoflow. A year later, Linde acquired Sulzer and in January, Air Liquide acquired ACD.
Evanko added that this part of the liquefier is one of the longest lead-time items at one to two years depending on the configuration. LAT has these capabilities in-house and our ownership of these capabilities will help Chart win liquefaction projects and deliver them in significantly shorter timeframes, a further differentiator in the expanding liquefaction market.
“It is an exciting time for Chart and L.A. Turbine as we now work together to bring our customers expanded solutions across multiple molecules, including nearly all types of energy sources and multiple industrial gas applications,” Evanko said.
“L.A. Turbine is one of the only turboexpander engineering and manufacturing companies that can design and produce very specialized expanders; one of the longest lead time items in the hydrogen and helium liquefaction supply chain. With this capability in house, we are further differentiated in liquefaction – not just from decades of experience but also from world class efficiency and now, significantly shorter and guaranteed delivery times.”
Chart said that LAT is complementary to its own businesses and the two companies have worked together for numerous years. “We expect to have immediate and significant synergies including expanded field service and repair capabilities,” Chart said.
“Since our company’s inception, L.A. Turbine’s focus is to be the go-to turboexpander solution provider, as an OEM of highly-engineered rotating equipment designs and process solutions for engineering, procurement and construction clients and end-user operators as well as aftermarket, service and repair,” said Danny Mascari, president of LAT. “With Chart we can both capitalize on emerging market opportunities while also enhancing and extending the reach of the value chain to our collective customers through our people, technology, infrastructure and financial assets. In addition, we remain committed to providing the top-of-the-line FX-Turbo aftermarket service our turboexpander customers have come to know and expect.”
The acquisition of LAT is the latest in a series of additions to its portfolio, including Cryo Technologies’ helium and hydrogen liquefaction capabilities which will also utilize L.A. Turbine’s equipment. Chart said that it and LAT both have an active commercial order pipelines and have multiple requests for hydrogen liquefaction and processing and a variety of energy products.
Looking ahead to 2022, Chart expects LAT to contribute between $40 and $50 million of revenue and $0.20 to $0.30 of non-diluted earnings per share on approximately 35.5 million weighted shares outstanding, assuming a tax rate of 18%.
In addition, the total addressable market (TAM) for specialty products from the combined firm is expanded by $350 million because of from this acquisition, Chart said. Chart can now offer expanded services for hydrogen liquefaction, helium liquefaction and carbon capture with energy storage.
“This addition brings our total near-term specialty products addressable market size to $6.6 billion,” Chart said.
Chart Industries manufactures engineered equipment servicing multiple applications in the energy and industrial gas markets.