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Executives

Michael F. Biehl - Chief Financial Officer, Executive Vice President and Treasurer

Samuel F. Thomas - Chairman, President and Chief Executive Officer

Analysts

James C. West – Lehman Brothers

Ole Slorer – Morgan Stanley

Michael Weisberg – ING

Pete Walstrom – Goldman Sachs

Gregory J. McKinley – Dougherty & Company

J. David Anderson – UBS

Chart Industries, Inc. (GTLS) Q2 2008 Earnings Call July 31, 2008 10:30 AM ET

Operator

Welcome to the Chart Industries, Inc. 2008 second quarter conference call. (Operator Instructions)

You should have already received the company’s earnings release that was issued earlier this morning. If you have not received the release you may retrieve it by visiting Chart’s website at www.Chart-Ind.com. A telephone replay of today’s broadcast will be available following the conclusion of the call until August 14. The replay information is contained in the company's earnings release.

Before we begin the company would like to remind you that statements made during this call that are not historical in fact are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied in the forward-looking statements. For further information about important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, please refer to the information regarding forward-looking statements and risk factors included in the company's earnings release and latest filings with the SEC. These filings are available through the Investor Relations section of the company's website or through the SEC website www.SEC.gov. The company undertakes no obligation to update publicly or revise any forward-looking statement.

I would now like to turn the conference call over to Michael Biehl, Chart Industries Executive Vice President and Chief Financial Officer.

Michael F. Biehl

I’ll begin by giving you a brief overview and highlights of our second quarter results then Sam Thomas, our Chairman, President and Chief Executive Officer will provide highlights of the operating results for each of our business segments and then I’ll finish it up by giving our revised outlook for 2008.

We’re pleased with our second quarter results. Sales for the quarter were $197.8 million representing an increase of 18% compared to net sales of $167.6 million a year ago. The sales growth of over $30 million was led by our Energy and Chemicals segment but we also had positive sales growth in both Distribution and Storage and our BioMedical businesses. Net income for the quarter rose to $22.2 million or 76% per diluted share a significant increase over the $8.4 million of net income or $0.32 per diluted share reported a year ago. We should note however that the second quarter of 2007 did include $7.1 million of one time pre-tax non-cash stock-based compensation expense from the vesting and performance based options in conjunction with our secondary stock offering completed in June of 2007.

Our gross profit for the quarter was $64 million compared with $51 million a year ago. This increase was led by our Energy and Chemicals segment due to improved project mix and execution but also due to performance incentives and change orders earned during the quarter. In addition our BioMedical segment contributed to the margin expansion due to higher volume and improved pricing. With the stress of foreign currencies against the US dollar we had favorable impact from currency exchanges when comparing to the quarter against the same quarter in 2007. This primarily impacted our Distribution and Storage segment with their operations in the Czech Republic in China and our BioMedical segment because of its biological storage systems sales are largely transacted in Euros. For the quarter the benefit from these currency exchanges increased sales by approximately $9 million and gross profit by approximately $3 million if you apply the currency rates that were in effect in the 2007 quarter against the 2008 quarter results.

SG&A expenses for the quarter were $26.3 million or 13.3% of sales compared with $28.8 million or 17.2% of sales for the same quarter a year ago. As I mentioned earlier the 2007 included quarter included $7.1 million in stock-based compensation expense from the vesting and performance based options in conjunction with our secondary stock offering last year. Excluding these charges SG&A expense as a percentage of sales would have been 12.9% of sales for the prior year quarter. The growth in SG&A expenses in the current year was primarily the result of increased support costs related to our business growth. Amortization expense for the quarter was $2.8 million or 1.4% of sales compared to $2.6 million or 1.5% of sales for the prior year quarter reflecting additional amortizable intangible assets from our acquisition.

The quarter had a foreign currency gain of $1.5 million compared with foreign currency loss of $600,000 for the same quarter a year ago. The majority of this currency gain occurred in our Czech Republic subsidiary as the Czech Koruny strengthened significantly against all currencies including the Euro. Since many customer contracts and supply purchases are in Euros at this subsidiary they use forward and spot contracts to sell Euros and purchase [Korunies] at set rates which are needed to pay employees and certain suppliers. These currency hedges have provided the majority of the currency gain during the quarter. Income tax expense was $9.2 million for the quarter and represented an effective tax rate of 29.3% compared with $4.3 million for the prior year quarter representing an effective tax rate of 34.1%. The decrease in the effective tax rate was primarily due to an increase in foreign investment tax credits and lower foreign tax and domestic state tax rates. In addition during May of 2008 the Internal Revenue Service completed an examination of the company's US income tax returns for 2004 and 2005. As a result of the company’s unrecognized tax benefits decreased resulting in an income tax benefit of $230,000 which reduced the current year’s tax expense. Therefore the effective tax rate for the full year is now expected to approximate 30% versus our previous estimate of 31%.

From a cash flow standpoint we continued to generate positive cash flow from operations with our cash balance at $101 million at June 30, 2008 and that’s after paying almost $19 million for our acquisition which closed on April 1, 2008. Cash provided by operations for the quarter was $13.2 million compared with cash provided by operations of $7.3 million for the prior year quarter. The increase is primarily due to higher net income partially offset by increased inventory and accounts receivable to support our business growth. Cash used in investing activities for the quarter was $21.5 million compared with $5.6 million for the same quarter in 2007. Capital expenditures for the quarter were $2.7 million compared with $5.6 million a year ago. Capital expenditures in both periods were primarily used for facility expansions to support business growth. The 2008 period also included $18.8 million for the acquisition that we closed on at the beginning of the quarter.

For the quarter cash provided by financing activities was $800,000. The year ago quarter included $40 million of voluntary principal prepayments under the term loan portion of our senior credit facility and $38.1 million in net proceeds received from our secondary stock offering.

Now I’ll turn the call over to Sam Thomas who will review our operating results and business segment highlights.

Samuel F. Thomas

We are very pleased with our second quarter operating results which again were led by our Energy and Chemical segment. At Energy and Chemicals, or E&C, sales grew by 35% to $78.2 million for the quarter compared to $58.1 million for the same quarter in the prior year. E&C gross profit margin increased to 32.1% in the quarter compared to 27.2% for the same period in 2007. The improvement in project mix includes significant work on L&G liquefaction and petro-chemical projects. In addition performance incentives and change orders were earned on several projects improving margins by about 1.5%. These performance incentives for early project completion are validation of the positive changes that E&C management has made relative to project execution. We should note that the second quarter of 2007 included additional costs from complex one time long term insulation projects that lowered results as well as other fixed price contracts where we have incurred escalating raw material and labor costs.

At our Distribution and Storage segment, or D&S, sales increased by $6.6 million to $93.2 million compared to $86.6 million for the second quarter of 2007. The increase was primarily due to an acquisition and higher volume in packaged gas systems as a result of continued growth in the industrial gas market. D&S sales also benefited from the strengthening of foreign currencies against the US dollar as Michael previously mentioned. Lower volume in US bulk storage tank shipments and the timing of price increases versus material cost increases were the primary reasons for the decline in gross profit margin to 30.8% in the quarter compared to 31.8% a year ago. It should be noted however that the US bulk storage tank orders rebounded somewhat during the second quarter of 2008 and the trend we’ve seen over the last several quarters appears to be turning. As you may recall the Linde and BOC merger have resulted in lower US bulk storage tank shipments as they integrate and work through existing inventory levels. While there was gross margin deterioration due to the rapid strengthening of the Czech Koruny versus the Euro much of this was recovered in the currency hedges that Michael mentioned earlier.

Our BioMedical segment sales for the quarter increased to $26.4 million from $22.9 million for the same quarter in the prior year. All product lines contributed to the sales increase. Both medical respiratory and biological storage systems product sales increased due to higher volume particularly in biological storage systems where we are seeing strong growth in both domestic and international markets. Biological gross profit margin increased to 38.4% compared to 34.5% a year ago. The improvement in margin was due to higher volume and continued shift to higher value added customer solutions for biological storage system sales as well as favorable currency impact from Euro denominated sales.

Backlog at June 30 approached the half billion dollar milestone at $498.1 million 6% greater than the March 31, 2008 level of $468.9 million. Orders at E&C during the quarter were $85 million compared to $51.1 million in the first quarter of 2008. Orders during the second quarter of 2008 included a number of smaller orders totaling in excess of $30 million destined for the Asian market which demonstrates how strong and important that market is to us. Projects included several ethylene plants in China and Singapore, natural gas processing plants for Korea and Thailand and numerous air separation projects in China where our braised aluminum heat exchangers are used.

Our bid and proposal activity has remained strong with multiple opportunities involving base load LNG plants and other products related to propane dehydrogenation or PDH, nitrogen rejection and clean coal technology applications for industrial gas companies. As you may have read Energy World Corporation has publicized its plans to move forward with construction of additional LNG projects in Indonesia and Queensland, Australia. We’re optimistic that the successful relationship between Energy World and Chart E&C will continue for these projects. Orders for Distribution and Storage for the quarter were very strong at $115.4 million compared to $91.1 million for the first quarter of 2008. This represents one of the strongest quarters for order intake in recent history for D&S. Orders include several large engineer tank orders as a result of what appears to be stronger demand in the global industrial gas market.

In addition as I previously mentioned we also noted a small improvement in US bulk storage tank orders during the second quarter of 2008 relative to the last several quarters. Distribution and Storage backlog has grown to $146.5 million at the end of June an increase of $22.3 million over the backlog at March 31, 2008. BioMedical orders in the quarter were $26.7 million which increased $4 million over the $22.7 million of orders during the first quarter of 2008. Medical respiratory orders rebounded from the first quarter which was negatively impacted by elections in Italy one of our largest markets as healthcare providers were concerned about potential impact on the regulatory environment with respect to medical respiratory. Those issues did not materialize and our orders improved during the second quarter.

Michael will now provide you with our updated outlook for 2008.

Michael F. Biehl

Based on year-to-date results, current order backlog and second half expectations the company is raising previously announced sales and earnings guidance as follows. Our net sales for 2008 are now expected to be in the range of $770 million to $800 million compared with the previous guidance of $745 million to $780 million. Our diluted earnings per share are now expected to be in the range of $2.55 to $2.65 per diluted share compared with prior guidance of $2.33 to 2.45 per diluted share which is based on an effective tax rate of 30% and approximately 21.9 million weighted average shares outstanding.

Thank you for participating in our conference call. This concludes our prepared remarks and now I’ll open up the lines for questions.

Question-And-Answer Session

Operator

(Operator Instructions) Your first question is from James C. West – Lehman Brothers.

James C. West – Lehman Brothers

Sam, we’ve obviously been tracking the Energy World news that’s been coming out as well plus I’ve seen at least one award recently from Bechtel in Australia and it looks to me like first off your LNG orders could start to accelerate here in the next call it six months. First, is that an accurate statement? Secondarily, do you need to or are you planning to add additional capacity in anticipation of this?

Samuel F. Thomas

There has certainly been an increase in LNG bidding activity and working through the details of bringing these projects to fruition, getting full funding for them which is exciting for us but we try not to get too excited before we actually close the deals. In response to your question about capacity we have added capacity in many areas and we’re well set up for braised aluminum heat exchangers in particular, a key component. In terms of our fabrication areas, we have capacity. We also have plans ready to go forward for increasing our capacity both here in the US and in China to meet anticipated orders.

James C. West – Lehman Brothers

Sam, where would you say your utilization is currently?

Samuel F. Thomas

It varies by site but I would say in general we’re in the 75% to 80% of installed capacity.

James C. West – Lehman Brothers

Michael, I had a question on the E&C business, obviously very impressive margins for the second quarter. I think Sam mentioned 1.5% was from an incident of awards related to some contracts but going forward do you think that margins could be maintained probably at a 30% or higher level.

Michael F. Biehl

We think for the year it will average probably in the 30% range but there’s potential to go higher because there’s potential for more change orders and more incentives out there.

Operator

Your next question is from Ole Slorer – Morgan Stanley.

Ole Slorer – Morgan Stanley

Sam, half a year ago you warned a little bit of a slowdown in the US domestic market, industrial market. Since then economists have turned maybe out to progress a little bit worse than we thought rather than better, so what is that’s turned out so much better than what you thought back then?

Samuel F. Thomas

There are times when I like being wrong but the US has been a very interesting environment because while we’re certainly seeing lots of struggles in the economy significant parts of the US manufacturing base are still very strong whether it’s because we have high exposure to energy related manufacturers or the weak dollar encouraging exports of US manufactured products from heavy manufacturing, our customers and hence we have enjoyed continued demand. In addition to that we worked pretty hard in all of our businesses at identifying opportunities where the markets were growing when some of our traditional markets were softening so that we’ve opened up new applications and our success in doing that has really been gratifying.

We’ve won orders for, as an example within our Distribution and Storage business, for CO2 carbon capture applications and combined heat and power, power plants. We’ve been a beneficiary of the Port of Los Angeles converting all of their trucks over to LNG vehicles, winning both LNG refueling stations and LNG vehicle tank contracts. We won some large storage tank business in our D&S business for effectively new applications, things like nitrogen injection to stabilize the heat content of LNG in peaking stations. We’ve been very successful in prospecting for and winning new applications for our products and tailoring our products accordingly and winning as a result of that. So it’s very encouraging.

Ole Slorer – Morgan Stanley

It looks as if the domestic natural gas prices might trend well below world prices for the next 12 or 18 months. If domestic natural gas prices stay relatively soft how will that affect your business? Clearly a lot of your customers will be very competitive but have you thought about that?

Samuel F. Thomas

We spend a lot of time trying to understand that and our business is sufficiently diversified that if one segment goes down, we’re oftentimes picking up elsewhere. A period of relatively soft US natural gas prices doesn’t concern me overly. We’ve seen lots of drilling activity in the US which has helped our E&C air cooled heat exchangers. It’s pumped up natural gas processing projects and I guess what we’ve seen is that if US natural gas prices trend down, there’s a fairly effective floor that comes up pretty quickly from increased use of natural gas for power gen. I’m not overly concerned. I guess a feature is that the projects that are hottest in terms of looking like they’re going to move forward for LNG are in Asia where spot market and contract prices are in contrast the US amongst the highest in the world.

Ole Slorer – Morgan Stanley

I was thinking more in terms of US chemical or other industries becoming more competitive and therefore somehow requiring more clean oxygen or oxygen compression or anything along those lines.

Samuel F. Thomas

That’s a good point Ole. The products we supply that are used in efficiency improvement projects will be positively benefited. I think that when you look at the US chemical industry, what we’re seeing is marginal plants being taken out of production and the most productive plants getting significant capital expenditure improvements which we have tended to benefit from. We seem to be very well exposed to people adjusting to higher energy prices worldwide and the drive for higher efficiency. I think that’s a key feature is that a big part of all of these things, regardless of where spot prices are, I believe we’re going to see a fairly long term trend towards investment in energy conservation which again we tend to benefit from.

Ole Slorer – Morgan Stanley

So basically your capacity and how you see the industry, do you think it’s fair to assume that you can manage a multi-year high teens top line performance sales growth?

Samuel F. Thomas

I would be happy to confront that problem and I think we’re well positioned to do it. We’ve got capacity available and within the timeframe where we run out of capacity we’ve got the capability and the cash flow to put in additional capacity. I feel very good about that.

Ole Slorer – Morgan Stanley

Finally I’ve been hearing some rumblings that various players are considering the US LNG export facilities. Are you seeing any inquiries from your product that might support that?

Samuel F. Thomas

I have not seen those go to a proposal level. My view is that they’re at the level of rhetoric and raising the view that there is more US natural gas available. I guess I personally would be surprised to find that outside of Alaska that the US would build an LNG export terminal. I think we’ve got plenty of good uses for natural gas in the US whether it’s for power gen or as Boone Pickens has suggested as a vehicle fuel.

Operator

Your next question is from Michael Weisberg – ING.

Michael Weisberg – ING

Sam, one would have expected maybe the Czech subsidiary in D&S to see some softening in Euro but it doesn’t sound as if that’s happened or has it happened a bit? Because it sounds just from your talk that the Asian end market is really the strong one. So is that evidenced in the China subsidiary growth?

Samuel F. Thomas

It is. Our China facility has seen lots of demand growth and our biggest constraint in China is adding qualified people to ramp up capacity but the underlying demand is very robust. In the Czech Republic we did see some softening of demand for standard bulk tanks for Western Europe as there’s been some consolidation amongst the industrial gas players within their country organizations to a more pan-European approach but we’ve successfully maintained very strong order intake with some of these diversified applications that we’ve chased so that in fact their demand has been robust. In fact their backlog is at an all time record level.

Operator

Your next question is from Pete Walstrom – Goldman Sachs.

Pete Walstrom – Goldman Sachs

Staying on the E&C margins just for a minute, do the majority of your contracts have performance incentives and are they solely related to the delivery schedule or is there some other aspect that we should be considering?

Samuel F. Thomas

The majority of our contracts do not necessarily have performance incentives and typically those that do have performance incentives are related to schedule. There are some opportunities occasionally for exceeding cost targets or performance targets but those are the exception. The benefits that we refer to here were primarily associated with getting agreements on change orders for changes of scope in projects or for meeting accelerated delivery schedules.

Pete Walstrom – Goldman Sachs

From a change order perspective, is that also the majority of projects or do you tend to see those maybe one in three, one in four times when a contract comes up?

Samuel F. Thomas

When you’re dealing with EPC contracts referring to better project execution oftentimes means being better at going after and getting change orders. So where in the past change orders as a significant portion of the final revenue on a job may have been the exception, in the current world it’s becoming more of the rule. At the current time I would say that perhaps 30% to 40% of our contracts involve change orders where the revenue may grow more than 10% as a result and that number over the next couple of years may grow slightly.

Pete Walstrom – Goldman Sachs

Staying on E&C for a minute and just thinking about the scale of a couple of your projects, is there really a health mix between small, medium and large projects or have you seen recent trend toward one particular size?

Samuel F. Thomas

I think if you look in the context of our project pipeline it probably hasn’t changed significantly. We’re certainly seeing more interest in small and medium scale LNG projects and there is more of them in our bid pipeline. At the same time the past six months of very high Asian spot market prices for LNG has meant that quite a few of the Asian or Austral-Asian potential projects have had increased activity on them. The balance remains.

Pete Walstrom – Goldman Sachs

Shifting to the D&S segment you mentioned that some of the bulk tank orders were a little bit light in terms of volume but bulk tank orders suggest an uptick in 3Q margins. Would that be a fair assumption?

Samuel F. Thomas

Difficult to call. I think one thing that’s worth pointing out, we’re more or less forecasting fairly flat margins in D&S going forward for the rest of the year, but there is some upside potential from mix with large engineered tanks and a part of the margin decrease compared to last year in D&S, or a significant part of it, was related to the rapid appreciation of the Czech Koruny versus the Euro. Our hedging worked effectively because a good part of the currency gain we reported was the offset for the loss in gross margin there because when we get rapid changes over a period of one or two months it’s difficult to get that reflected in pricing to customers immediately, there’s a lag. Again hopefully as it did in the past quarter the hedging activity [inaudible] that.

Pete Walstrom – Goldman Sachs

Lastly could you just quickly walk through the prioritization of cash and as you screen potential acquisition candidates are you still targeting tuck ins or could there be something a little bit larger and has valuation been a sticking point or have these remained relatively reasonable?

Samuel F. Thomas

Pat we’ve got a good portfolio of acquisition targets that we’re working on, both tuck ins and potentially some larger acquisitions. I am concerned by pricing expectations because the market in the areas that we’re most interested in is fairly buoyant right now. We’ll continue to be patient and not overpay. It has led me to push all of our management teams to be more aggressive and do more work on capital expenditure for organic acquisitions. I think there is more potential there. Failing that we’ll consider other uses that would provide the greatest shareholder value but I remain optimistic that we’ll be able to make acquisitions but we don’t feel pushed to make them at very high prices at the moment.

Operator

Your next question is from Gregory J. McKinley – Dougherty & Company.

Gregory J. McKinley – Dougherty & Company

I wanted to ask you a little further detail about the Energy World relationship, can you remind at this stage how much backlog remains on the initial order that you received last July?

Michael F. Biehl

There is right now at the end of the second quarter, there was about $66 million sitting in backlog still related to Energy World. This is about 19% of E&C’s backlog and about 13% of the company’s total backlog.

Gregory J. McKinley – Dougherty & Company

As you mentioned at the beginning of the call, we’ve seen the company talk about some Australian opportunities as well as what they’ve called a phase two potential to the Indonesian project. What should we expect in terms of an order in advance of actual work commencing? What type of timing lead would there typically be when they award you an order before the project commences?

Samuel F. Thomas

Following receipt of order there would be a two to three month delay before we had significant work going forward or significant revenue generation under percent of completion. Is that what you meant?

Gregory J. McKinley – Dougherty & Company

Yes. When you’re looking at your current backlog are you seeing much of a shift in the mix between LNG, natural gas processing, ethylene, etc.? Are any clean coal or oil sands projects beginning to play a bigger role in the backlog?

Samuel F. Thomas

They are. First in our backlog LNG is still the largest of the roughly five segments we divided it into but in terms of order intake over the past six months, air separation a large part of which is perhaps as much as 40% of the total air separation work we’re doing now is for clean coal or oxy-fuel combustion applications. Another very strong feature of the past six months’ orders has been in natural gas processing where early stage as more natural gas is being produced is the equipment to clean it up for pipeline use, to take out the natural gas liquids particularly. That has been a particularly robust part of our first six months order intake.

Gregory J. McKinley – Dougherty & Company

My last question related to gross margin. When you look at margin going forward how much of the opportunity that’s still out there for you would you say really relates to product mix versus I think you opened the call saying utilization is maybe at about 75% with some of the capacity expansion you did last year. Can you give us a sense for how mix versus utilization play out in your margin outlook which plays a larger role?

Samuel F. Thomas

That may be beyond our capabilities.

Gregory J. McKinley – Dougherty & Company

I guess I’m just wondering how much opportunity lies out in front of you as you move toward fuller utilization at your expanded facilities?

Samuel F. Thomas

I think there’s lots of opportunity and we certainly have upside. It’s difficult to assess the pricing and the capacity utilization of our competitors which makes a significant difference. We have opportunities out there. We work very hard to take such good care of our customers that they don’t consider using anyone else but we’re not 100% successful.

Operator

Your next question is from J. David Anderson – UBS.

J. David Anderson – UBS

Sam, if we’re looking at your Distribution and Storage inbound orders, they’ve moved up pretty substantially four quarters, they were coming at a run rate about $70 million to $75 million, now we’re over $100 million now. Can you talk a little bit about what’s happened over the last four quarters to change that? I know you’ve talked about foreign currency has helped a little bit, but that’s a pretty big jump. Can you just walk us through a little bit of how we’ve gone from there to here now?

Samuel F. Thomas

If you’ll remember that we have been growing capacity in all three of our locations and sales have been growing some of it at as you mentioned has been related to currency. We’ve taken on a higher percentage of orders that are either for larger engineered tanks that have longer lead times because of material availability for our space capability, but there’s also an element of selling to larger projects which although the order is placed they may not need the tank for 12 months or 14 months. In other words they’re releasing orders based on a whole package of products that the tanks aren’t on the critical path so that some of them are for delivery stretching out a little bit longer than we have historically seen.

Then there are others where there are orders for multiple tanks that may have a spread of four to six months before they are all utilized because they’re the case of ramping up on a site. It’s really a reflection of the fact that as some of the smaller tank business has declined slightly because of reduced industrial activity in either the US or Western Europe we have supplanted that with larger project work which has longer lead times. I feel pretty confident that over the second half of this year and going into 2009 we’ll start t see higher levels of shipments and a flattening of that backlog.

J. David Anderson – UBS

So it’s sort of a catch up because I guess if your revenue has been growing at a slower pace on a sequential basis than your inbound and what you’re suggesting is more of a timing thing that should work out into next year.

Samuel F. Thomas

Correct.

J. David Anderson – UBS

How confident do you feel in terms of the projecting out those inbound orders from here on out? Like you said it’s moved up pretty strongly the last four quarters. Where do you think it goes from here? Do you think it continues to move up from here or has it flattened out? What’s your best guess right now?

Samuel F. Thomas

I think the best I can do is just refer to our project activity which is strong and to our major industrial gas customers who are all fairly bullish. You’ve probably noted that virtually everyone in the industrial gas worlds reporting has been raising their guidance and talking about strong project backlogs on their own. I feel pretty good that in the current framework our customers are saying to us that they’re seeing increasing activity levels going forward.

J. David Anderson – UBS

Looking over at the energy and chemicals division on your backlog, about $342 million or so, how much of that is in 08 and how much in the reminder 09 roughly?

Samuel F. Thomas

Bear with me just a minute, I just need to back into that. Roughly 50% will ship in 08, the balance 09. I would say that if you go out 12 months from June 30th that we’re probably still going to ship on the order of 85% of that backlog within 12 months.

J. David Anderson – UBS

That’s a number that you’ve quoted in the past, right?

Samuel F. Thomas

Yes.

J. David Anderson – UBS

With the D&S is that more like 60% or so? Like 60% and 40%? 60% 08 and 40% 09? Something like that?

Samuel F. Thomas

I don’t have those numbers close to hand but that would seem very reasonable. It will get to the 60% to 70% range.

Operator

There are no further questions at this time.

Samuel F. Thomas

I’d just like to thank everyone for participating today and to stress that as I’ve said previously we’re really excited about the prospects for Chart. I’m particularly gratified with the performance of our entire management team and all of our employees over the past quarter and it really makes me very confident looking toward the future of our potential to continue to growing. Thank you.

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Source: Chart Industries, Inc. Q2 2008 Earnings Call Transcript
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