Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership, and vision and global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism right here, right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now welcome inside the ICE House. Here's your host, Josh king of Intercontinental Exchange.
Josh king:
From the 13th to the 18th century, alchemists were obsessed with the idea of transmutation. The thought that base metals like lead could be transformed into noble metals like gold and silver. These early scientific adventures relied on a simplified version of the world that comprised only of four elements. Chemists today, they take a little more complicated view. And although they might not have found a way to convert base metals into gold, they've changed gases into liquids and used both to creating the energy that drives us. While modern chemistry would seem like magic to most medieval alchemists, their process was rooted in understanding about the states of matter and the way that things react to one another. Scientists began to realize that by cooling or freezing many of the gases critical to the functioning of modern society, they became easier to transport, to store, and to use than compressed gas. Calm, cool, and collected is an understatement here.
Josh king:
Most of the gases and air that surrounds us is invisible. We can't see it, but it's everywhere. Much like those gases, the company whose leader we'll be talking to today, plays a pivotal role in keeping our world humming. But it's name and many of its products aren't ones that at occupy our consciousness on a day to day basis. About an hour away from ICE's Atlanta headquarters is Ball Ground, Georgia. And there you'll find Chart Industries, a leading provider of technology, equipment, and services related to liquified natural gas, hydrogen, biogas, and CO2 capture. The work that Chart Industry does isn't one that we often think about, but it's critical to how our lives function, the care that we receive in hospitals, and the energy that we use to power our lives. Chartering the course of Chart Industries is Jill Evanko, it's president and CEO. Her financial skills have been instrumental in balancing the company's growth while unlocking new opportunities across the markets it serves. Jill's leadership has helped spur company performance over the past three years, delivering every more value for its shareholders. Our conversation with Jill Evanko is coming up right after this.
Speaker 3:
The transition to electronic trading is gaining support in fixed income markets, presenting opportunity and driving demand for data. At ICE, we are a leading provider for fixed income data and analytics. We offer a comprehensive fixed income execution solution via ICE Bonds, committed to execution quality, transparency, and information. We provide a wide range of platforms with deep liquidity pools that support multiple trading protocols. Our fixed income indices can be tailored to your investment strategy, powered by our data. Our ESG data offers increased transparency into fixed income markets. Access the ICE fixed income ecosystem, including the ICE Bonds execution platforms, evaluated pricing and analytics via ICE Fixed Income Select. By creating a single point of access for our execution platforms, customers can utilize a variety of trading protocols and manage risk. ICE supports your end-to-end fixed income workflow, increasing transparency, execution efficiency, and data access across the fixed income marketplace.
Josh king:
Our guest today, Jill Evanko, is president and CEO of Chart Industries, that's NYSE ticker symbol GTLS, a leading independent global manufacturer of highly engineered equipment, servicing a variety of market applications in energy and industrial gas. Jill joined Chart in February, 2017 as its chief financial officer previously serving in operational and financial leadership positions at Dover Corporation, that's NYSE ticker symbol DOV, Arthur Anderson, Honeywell, and Sony that's NYSE ticker symbol SONY. She received her MBA from the University of Notre Dame and earned her undergraduate degree from La Salle University. Welcome, Jill inside the ICE House.
Jill Evanko:
Great to be here. Thanks for having us.
Josh king:
Any thoughts on the Marcus Freeman era currently unfolding at Notre Dame?
Jill Evanko:
I think it's a really good thing for the team, for the organization. And I think it's going to be a national championship.
Josh king:
This year or under the Freeman era?
Jill Evanko:
Under the Freeman era.
Josh king:
Excellent. So you spend some time, Jill, on the Chart Industry's website and you happen upon this amazing infographic called Chart City, which in a glance shows you every corner of town in which one of the 16 different businesses that fall under the Chart corporate banner is somehow involved in our lives. Jill, you want to bring us through a little tour of some of your favorite spots in town? Folks at home can play along with this by going to chartcity.chartindustries.com. And I guess we could start number one, not far from the mega ship doc is LNG and hydrogen liquidation, what does that do?
Jill Evanko:
So that's one of the most exciting parts of the business, is liquefaction processes that we have. And as your intro explained, there's a lot of molecules happening in the world today and working together. And that's one of the beautiful parts of the Chart City, is there's the nexus of clean. So we call it clean power, clean water, clean food, clean industrials. Everything that you touch really comes into that category. So liquefaction is critical for the power that everyone uses, energy. And that's taking molecules and making them usable, whether that's LNG for power, whether that's hydrogen to use in an infrastructure application or an industrial application. We are the technology behind that and it's our heat exchangers that power that technology. And then you have to store that somewhere, so put it in a tank and you got to take it somewhere, put it in a trailer. We provide those too.
Josh king:
That's number nine, looks like your LNG storage tanker pulling into port. You got your number seven and your number are 23 rail cars that in various forms are transporting the gases outside of Chart City.
Jill Evanko:
You got it. So transport, storage, we provide equipment into the making of the molecule, we don't own it, and then we provide equipment into the end use. So go to a fueling station, you can go onto a highway in Europe and Germany and you can see those class eight duty commercial trucks that utilize our LNG onboard tank. And it's not just LNG or hydrogen, it goes across many, many molecules, which makes us molecule agnostic. So one of the greatest parts of our business is, hey, we don't really care which molecule you use because we'll still win.
Josh king:
All the way at the other side of Chart City, number 22 I think is the nitrogen dosing systems, liquid nitrogen dosing systems for food preservation, craft brewing, and nitro coffee. That's my kind of place.
Jill Evanko:
There you go. We love this particular piece of the business because it really hits what we call agriculture. So food, beverage, even cannabis, and this part of the business, the nitrogen doser, helps achieve sustain targets for our customers by dosing a particular amount of molecule into packaging. So think of your bottle of water, it's firm before you open it. But we help them achieve less plastic in that bottling but keeping that firmness, that's just one example. Also love the national accounts that we have. One of my favorite things, chicken nuggets. So Chick-fil-A is one of our national accounts that utilizes our equipment on the food and beverage side. You name it across the board, like you said, nitro coffee, Starbucks uses our equipment for nitro coffee in a can. So we love the fact that there's a lot of activity in these markets and there's a lot of peer pressure. If Coke does something, typically Pepsi will do it as an example. So that's a great piece of the business and that helps people achieve their ESG targets as well.
Josh king:
We can take any other stops you want around Chart City. Those are just the two edges of town. But you can pick out anything else that you think our listeners, if they went to chartcity.chartindustries.com, would want to find in Chart City.
Jill Evanko:
I would point out, and I won't point anything in particular on here because it's in various different locations, but the industrial applications that also are using water treatment. So water treatment is key to the future of Chart City. And that's not just from having clean water for drinking purposes and that's in Western hemisphere, but also in the Eastern hemisphere, we're seeing a lot of activity around that. But water treatment is going to be key for the future of clean, so creating green hydrogen. And then you start to see how these pieces of Chart City work together, and that's a really important part of the fundamental of our business, which is cryogenics. And the coolest part of this, no pun intended, is that all of these pieces and parts can be utilized across here and they really work together. So you make a heat exchanger and it can be used in all of these numbers that you see on Chart City.
Josh king:
We're going to get a lot more into cryogenics a little bit later in our conversation. But let's take a step back from Chart City and head over to Philadelphia, Pennsylvania, which helped shape you at La Salle University. La Salle is ranked number one today in the NCAA's graduation success rate report for division one athletic programs. And you have been part of that in the past, you played division one tennis while getting your degree there and graduated at the top of your class. What do you think it was about Jill, about La Salle that made it such a successful environment for athletes such as yourself to both thrive all on the court and off?
Jill Evanko:
Definitely the focus on the academic side while creating the space for you to be able to play a sport is really the key there. And there are lots of different pieces and parts to how these values were instilled in the way that you thought about your priorities. So being in the honors program for academics, I was still able to go to practice at the right time and go to the matches in the right places and have that experience. But ultimately, the answer was, hey, there was no way in heck I was going to be a professional tennis player, so I better get my degree and I better do it well. And La Salle was great about allowing that to happen and not having you have to pick one of the two.
Josh king:
So after the US open this year, the champion came to the New York Stock Exchange because she said the number one thing her parents were in finance wanted to do was to visit Wall Street because that's the academia that was in their household. Were you brought up as a premier athlete and to focus on what was going on in the court or was it just a passion?
Jill Evanko:
No. So I was brought up playing baseball because my older brother, who is the CFO of Cigna Insurance, he was always playing baseball and I said, "I'm going to be better than him at that." And it turned out I ended up breaking my nose and my mom said you can't play baseball anymore. So I picked up a tennis racket at age 12 and hey, I got the opportunity to play and had a great time doing it, made a lot of experiences, and ultimately picked finance after thinking I was going to be a museum curator.
Josh king:
What town did you grow up in?
Jill Evanko:
Buffalo, New York.
Josh king:
So you earned your degree with this unique combination of majors at La Salle. Finance and history what drew you to that mix of disciplines?
Jill Evanko:
Well, I really didn't have a particular passion and I didn't say, oh, I always wanted to be a CFO or anything like that. I definitely loved art, loved history, and thought that there would be the opportunity to potentially be a lawyer or an attorney. And as I quickly realized, there weren't a lot of art museum curator jobs.
Josh king:
Although Buffalo has this amazing museum that's sprouting up. What's it called?
Jill Evanko:
I don't know the name of it, but I know exactly what you're talking about.
Josh king:
This philanthropist that's building it.
Jill Evanko:
Building a super duper nice art going in there. But with that said, I said, "All right, well I better get something useful and get a degree and be able to get a job." And so I said, "Oh, well finance sounds like a good plan." La Salle also gave me the great opportunity to have a variety of different jobs while I went to school. So I got to work at the SEC in Philadelphia, got to work at PNC Bank, and Smith Barney. So I got to really see the breadth of the types of jobs that were out there.
Josh king:
What did you like about the history part of it, of your academic training?
Jill Evanko:
Very fact based. You had to learn the story but it was always here is what happened and here's how these things came to be.
Josh king:
So, Jill, finance has been a dominant theme throughout much of your career. You've served in various financial roles for many companies before coming to Chart, requiring problem solving dot connecting to shape how an organization generates and deploys its capital. Bring us on this trajectory from La Salle and your first few opportunities honing your philosophy toward being a CFO.
Jill Evanko:
I came out of school and took a job at what was viewed at the time to be a great starting point, which was one of the big, at the time was big six, so Arthur Anderson. Actually at the time, that was when the consulting and the audit side were together and I went into strategy finance and economics consulting. So we got to do economic modeling for court cases and see a really wide breadth of industry. Needless to say, that didn't last very long because the Enron debacle happened, which by the way, I was not a part of. But I said, "Okay, I see the handwriting."
Josh king:
It's 20 years ago this week or last week.
Jill Evanko:
That's right. I see the handwriting on the wall and so let me go get the next job here. And got an opportunity to go to Honeywell. It was a really good stepping stone because I was in the corporate office but I also had the opportunity to see the different types of businesses out there. That was really where I fell in love with manufacturing. It wasn't about finance, it was really about, I love manufacturing because I know where the money is being made and I can interlink these things. So from there, I had multiple different opportunities. And what I learned at Dover, my 14 years at Dover, was really you have to have the experiences both out on the shop floor, being an operational person as well as a finance person. So understanding all the pieces and parts that go into successful finance, successful financial outcomes was really the trajectory of how I got to shape my thinking around, finance is not just a function it's both a contributor, but also an outcome.
Josh king:
You explained to me before we started recording that you're in town for two days to meet with investors. And that's the routine that now we're getting back to after a year and a half of virtual meetings. But beyond the little tour that we took through Chart City, our listeners may not know your brands or the range of products that you distribute. Suffice to say it plays this pivotal role in providing the energy that fuels our lives. When you are in one of those investor meetings or pitching customers, how do you begin that elevator pitch about Chart Industries and it's more than 4,000 employees?
Jill Evanko:
The key to that is that the fundamental of our business is the engineering, design, and the manufacturer of cryogenic equipment. So everything that you see has the competency of being cryogenic, so high pressure, low temperature. And that's what allows these pieces and parts to work together without you getting so fragmented or distracted across all of the many applications that these products get used in. So that's the way to think about the business and make it less complex. Than I've got 20 heat exchangers and 45 tanks and so on. So it's pretty exciting to see how the cryogenic processes and equipment work together. And then what you say is, all right, every single application in energy, in water, and as you've heard already, food and industrials requires cryogenic something. So how do we look at exploiting the opportunity by putting these pieces and parts together?
Jill Evanko:
And the more that we're seeing in the market these days with the heightened focus on sustainability and ESG is that there's a need for carbon capture to work with an industrial manufacturing plant or there's a need for water treatment to generate green hydrogen. And the way that these things work together is really how we bring value to the customer. Because these customers are not experts at this, they just want you to bring a solution and say, "Here's how I can make it work for what you're trying to accomplish." So we're really proud of the fact that our products go into a wide range of applications, but also that we help our own ESG story, but we help our customers ESG accomplishments too. Which is a really unique and really blessed portfolio to have.
Josh king:
Jill, way back in 1859, an entrepreneur and an engineer would establish what would become a leading manufacturer of all things bicycles and overtime motorcycles, cars, and aircraft engines. And while that's no longer what Chart does, that industrial spirit remains. What are your biggest selling products today? And how has Chart transformed over the past couple of years?
Jill Evanko:
So our biggest selling products are around hydrogen today, and that's really changed a lot. I always tell the story back in 2018, my year-end earnings call for 2017, I started talking about hydrogen and no one asked a single question. Then comes May 2020, and we've been doing hydrogen equipment for 56 plus years, and May 2020, suddenly everybody started saying, "I'm going to do hydrogen." It didn't matter what industry you were in, it didn't matter your brand, you were going to touch hydrogen. And that's really been great because we have been doing this for so long that our products were already ready to take this challenge on. And we've seen an abundance of interest across the globe, and most recently selling some liquid hydrogen trailers into Korea. So this is not just a one country type of thing. So that's pretty exciting stuff.
Josh king:
But just to follow up on that, hydrogen is so much increasingly beginning to be used as a fuel source across Europe as many governments are beginning to embrace and execute against their net zero goals. Many are turning to hydrogen as a fuel source. But share for listeners, it's got a few drawbacks, low density, flammability, ultra low temperatures needed to store it in liquid form, and make storage and shipping pretty complicated process. But it is in your sweet spot. Can you tell us about the expertise that Chart brings to the hydrogen markets?
Jill Evanko:
Yeah, definitely. And a lot of these things require education around how the products work and the safety elements. Hydrogen equipment is actually very, very safe given the experience set and the certifications at a regional level. But our experience in metallurgy is really important. You touched on the high pressure and the low temperature, so hydrogen at negative 423 degrees is far a different molecule to handle than something even at Kelvin. What our expertise in our design teams bring is the ability to design for that in particular around whether it's gaseous or liquid, the capability to store it, store it safely, and transport it and transport it safely. What we're getting more and more into, our customers that are saying, "I'm doing LNG today but I really want to be hydrogen ready in 10 years. So I don't have to rip out all of my existing infrastructure."
Jill Evanko:
And that's one of our core competencies too, is we'll get in really early with you and design that and figure out is this cost attainable? And we're seeing more and more of that, where yes, I can make you an ISO container that can do both. And as long as you're okay with this much boil off or this much loss and understanding what they do with it. So that engineering presence is really critical to the success of the business and it gets a sticky with our customers.
Josh king:
You talked about that year-end finance call in 2017, which you were talking about moving more rapidly into hydrogen. But that was pretty early in your tenure, what brought you to Chart in the first place?
Jill Evanko:
Actually, somebody I worked with at Dover was my predecessor at Chart and called me up to say, "Hey, you want to be my CFO?" And I came for that reason and I thought it was a really unique company. Part of it is around the entrepreneurial spirit that we maintain and we work really hard to maintain. So a small company with a ton of growth potential and still a lot of self-help that we could do and can continue to do to expand that margin set. So really a unique set of products with a great ability to grow. For me, it's about I can still be agile, make quick decisions, and change the future of the world and the future of the business and do so by returning to the shareholders. So I love where we sit and so much ahead.
Josh king:
Be agile but also ascend pretty fast because in June 2018, Charts board named you it's CEO. You implemented cost reduction work, did long term planning, and you focused on the LNG space that would bring new innovation and growth to the business. When you joined Chart, was that part of the plan when you were recruited from Dover?
Jill Evanko:
Definitely that I would become a CEO successor, assuming that I performed. I think it happened on a different timeline than everyone originally anticipated. But worked out fantastic for the timing around being able to prune the portfolio, look at the things that didn't make sense, what weren't we good at, and take those divest them, reallocate the capital into some of these higher growth and more core competency spaces. And that's been really part of the reshaping of our strategy and our portfolio. The greatest part for me is we're sitting here now where finally these big LNG projects are going to happen too. So as you pointed out in Chart City, our number one and two there are around big LNG export. We're going to not only have all this high growth and some of these more emerging cleaner fuels, then we're also going to have big LNG export on the US Gulf Coast, which just hundreds of millions of dollars of opportunity for us.
Josh king:
The commoditization of LNG has helped make natural gas a part of all of our lives. ICE, Intercontinental Exchange, no stranger to this asset as its home to some of the most liquid on exchange marketplaces for trading and hedge of LNG. Why was expanding your LNG business in 2018 pivotal to the growth of the company? And what trends are you paying attention to now? Certainly the amount of traffic in the Gulf.
Jill Evanko:
Yeah, definitely. LNG at that point in time was at a point in its maturity as a molecule to be cost effective and scalable, and we saw it becoming this more global market. So the opportunity was in front of us, we had the existing portfolio. So it was really breaking that down into the big LNG applications, small scale applications, and infrastructure. And being able to play in that at a mature scale was really important. You look at hydrogen and it's fallowing the same footsteps outside of the fact that I think it's going to happen a lot faster because there's a ton of companies that are moving quickly whereas in LNG, it took a lot longer. But now we have all these pieces and parts working together. I think that you're going to see that global spot market take advantage of the cheaper access on the US Gulf Coast as well as consistency in what I call resiliency of the grid.
Josh king:
In your elevator pitch to me, one of the first words you used was about cryogenics. I got my first exposure to cryogenics learning about where the preservation of Ted Williams remains were. But everyone got their crash course in cryogenics this year as COVID vaccines were rolled out for manufacturers like Pfizer, that's NYSE ticker symbol PFE in these especially built containers that stayed at ultra low temperature to maintain the vaccines structural integrity. Can you help us dive a little deeper into how Chart manufacturers and creates its cryogenic tank solutions?
Jill Evanko:
So for the COVID situation, the key piece of equipment that we manufacture and contributed to help out there is in our bulk tanks. So cryogenic oxygen storage, and you see these if you go to a hospital behind the scenes permanent installations. But we very quickly ramped up, we grew our production within a week by 67% to be able to help out, and that was back in March of 2020. We came up with very various different mobile solutions for field service hospitals and how we could accommodate that, including through our leasing program. So many different ways to contribute that liquid oxygen to the situation and help out. Which is really what you needed because an oxygen concentrator didn't have the purity of oxygen that you need to address the COVID situation in hospitals. It's been very fulfilling for our teams to be able to feel like they're giving back to the communities that we operate in as well. And it's been a very good offset to some of the other pieces of the business that softer in 2020.
Josh king:
You were only in the CEO suite for two years when COVID hits, I'm curious if you want to bring us into one of those initial calls with your management team, when you said, "This is both a real challenge for us, an opportunity for us, but really a need of us to work differently as a team to do what both the industry and hospitals and the society at large is demanding of us."
Jill Evanko:
We actually saw that there was the movement toward more and more people heading to the hospitals. So we were about 10 days ahead, which really helped out at the outset. I give my team all of the credit in the world because they were able to figure out, how do I repurpose a line and do so very quickly. Also all the way down to the production employees that were out on the shop floor and working overnight shifts and you name it. So it was a testament to the team saying, okay, I have a problem, I have a solution, and I'm able to go execute on it.
Jill Evanko:
And that's really the core of our 5,000 people that work across the world at Chart. And we did this in India, China, the EU, and the US. So it wasn't just corral in one shop. So really great to be able to give back. I think what came through COVID and has stayed with us is the idea of one Chart. So we were all working together, we were able to get certifications on the equipment that was built in the US for Europe when they needed it and vice versa. And just the level of pride that our team members had by doing this, I couldn't even compare. That's probably the best example over the last couple of years.
Josh king:
One Chart. After the break, Jill Evanko, president and CEO of Chart Industries and I will dive deeper into some of the global trends affecting markets, how Chart works with its customers to achieve their ESG goals and what's in The future for chart. That's all coming up right after this.
Speaker 5:
India has one of the strongest and fastest growing economies in the world. With a population of 1.4 billion, making energy secure, affordable, and sustainable is essential in supporting its growth. In response, the Indian government aims to diversify its energy mix, increasing its natural gas consumption to 15% by 2030. Efficient to transport, liquified natural gas is critical in supporting countries with developing infrastructure. ICEs West India marker LNG futures contract compliments our global natural gas complex, providing essential risk management as demand for liquified natural gas in India and the Middle East grows.
Josh king:
Welcome back. Before the break, Jill Evanko, president and the CEO of Chart Industries and I were discussing her career, her team, and the company's results. So almost a year ago, Jill, Chart announced that you were transferring your listing to the New York Stock Exchange, thank you very much. And on February 1st, you hosted your team virtual for the bell podium celebration to celebrate the transfer. Can you walk us through why Chart decided to transfer and what drew needed the New York Stock Exchange?
Jill Evanko:
We're really excited to be on the NYSE. And it was something that actually had been a goal of ours as a company. As we've grown, we felt like the different types of companies listed we're much more in line with our customer base. And that was something that was important. The exchange has done a fantastic job of interlinking us between the companies and giving us opportunities to network and work together. I'd say that while we anticipated that would be the case, has been just phenomenal since we joined February 1st. So multiple other reasons. And we enjoy the understanding the way that the exchange works and are very supportive of that going forward.
Josh king:
So, Jill, let's take a detour into the consumer corner of Chart City. I'm a Seltzer Fellr, got my own brand and everything. Seltzer demand is through the roof. Through your micro bulk program Chart offers a reliable and cost of solution to high pressure gas cylinders for beverage carbonation, pH balancing, greenhouse growing, and botanical extraction. Have you seen an increase in demand for your carbonated tank? And as someone who's stored up on seltzers in his garage, is this available for home consumption?
Jill Evanko:
Yes, it is. We will sell you any piece of equipment you'd like. But yes, we have seen an uptick in the last year around this. And it really isn't just targeted to any one particular element of beverage across restaurants, new builds, and very exciting times. The other thing that we've seen a lot of which is really a unique part of our portfolio is our minority investment in a company that does carbon capture for craft breweries and wineries and beverage companies. So really small level of investment, 100,1000-ish, two day install. And in a craft brewery, you can capture your CO2 and reuse it at beverage purity to make your beer. So when you hear about CO2 shortages, we're able to address that for these customers too. Great market.
Josh king:
And so important for their brand and ESG profile as well, you got it, exactly. So experts are expecting some of the supply chain issues that we've seen over the past several months continue well into '22, maybe even into 2023. How has Chart weathered the recent storm looking at the stuff on Chart City and made sure your customers have what they need?
Jill Evanko:
Definitely lead times are critical these days in particular when you're looking at the need for whether it's medical oxygen or whether it's somebody who's looking to transport a fuel to ensure that there's electricity or power. So lead times have been critical. And what we did early this year was we saw that there was going to be some challenges and we strategically chose to increase our inventory levels and have inventory on hand. So while that's a strategic decision, it hurt free cash flow this year. But on a regular basis where of a very high free cash flow generating business. But with that said-
Josh king:
Did investors give you any grief for that?
Jill Evanko:
Oh, yeah. They give you grief for everything. But serious in fairness, we look back at that and we think that was a very good decision. On the other hand, what you'd look at is to say, all right, well, we definitely have paid more to have that inventory on hand. Which is one of the headwinds that we're working our way through with pricing and with some of the other actions that we've had. Having that inventory on hand has allowed us to continue to meet the demand that's there. And it's allowed us to win more because others have not been able to meet those lead times.
Josh king:
I'm a skier, so I'm not so happy about this, but a balmy December so far has sent natural gas prices finally falling you from their highs that it really they hadn't seen since 2014. How closely do you watch the future's contracts? And how has the recent volatility affected Chart?
Jill Evanko:
It used to be much more linked. So you would even go back, it used to be WTI and oil pricing and natural gas pricing. But the customer's behavior is a little bit different than I would say pre-COVID in that the decision is made that they're going to construct project A or B or C and they're going to do it on this timeframe. So it's become less of okay, I'm looking at the activity of any particular index and making a decision off of that. I would say that I was nervous about that around natural gas infrastructure in particular. And in particular when you're looking at it in Europe over the last couple of months. We did not see any dramatic change in behavior. And I'm thinking that there was a view that this is going to move around anyway. So if we're having an infrastructure build, let's stay the course. That's what we've seen.
Josh king:
We talked a little bit about this in the first half of our conversation. But ESG is such a critical component of Charts mission, and you talked about it. Early in your most recent annual report, you've also begun strategically expanding Charts presence. And as you mentioned earlier, in clean energy applications, including biogas, carbon capture, why is giving Chart a more sustainable mission such an important goal for the company?
Jill Evanko:
Well, I think it's important overall for all businesses to be thinking about. I'm a believer that you can accomplish more if you actually embed it into your thinking and into your business versus trying to hit a quota or hit a regulation. And having it as part of our culture really has motivated new and innovative ideas, and that helps our customers. So our products are just perfect for these applications. Our customers have these targets out there that they have to go get, and they're measuring suppliers on their own ESG activities. So we have the best of both worlds working. But it's the result of it being part of the culture versus us saying, "Hey, we need to do something and let's figure out what to do." So we're always doing it. We didn't talk as much about it so it was all about packaging it up and talking about it appropriately.
Josh king:
Corporate citizenship, Jill, is also a growing concern for stakeholders. And there's an emphasis now on the social responsibility the companies owe to its workforce and communities. Thinking about Chart in particular, you've got over 40 global locations. How do you think about diversity and inclusion as part of your culture?
Jill Evanko:
Yeah, definitely. We have over 50% of our revenues and our team members are outside of North America. So there's quite a breadth of diversity in the business itself. I'm a believer in diversity, inclusion makes the company better. And that's the philosophy of our DE&I activities.
Josh king:
We talked about it a little bit on the show in previous episodes. But when do you think we're going to see broader adoption of hydrogen? And how much do we need to scale up green hydrogen in order to deliver energy to the world?
Jill Evanko:
I think we're already seeing the acceleration in hydrogen. And if you looked back 18 months ago, everybody was talking about it at a very theoretical level, like we need to go green. And now there's a much more pragmatic view about it, which is, hey, I can do blue or I can do gray hydrogen and still make an inroad on this path to greener and cleaner. So that's happening now. But what we really need to do as an industry as a whole is reduce the cost and increase the scale, and those two things go hand in hand. That comes through a variety of different ways. Private sector investment, like we've done, public sector, whether it's credit or stimulus programs. Which by the way I'm a firm believer can kickstart something. But ultimately the industry has to be so sustainable on its own. And that will come from utilizing hydrogen in the right places and the right applications not just saying it's the answer for everything.
Josh king:
Any other new neighborhoods coming to Chart City through M&A activity in the next year or so?
Jill Evanko:
We are continuing to fill in the gaps on our menu of clean. So we are feeling really good about where we sit today and very disciplined in our approach on adding anything. What you will never find us doing again, is going outside of the core of cryogenics. But we will be filling in hopefully some of those minority investments that we'd like to own in full. And from there, we'll continue to look for really innovative technologies. So staying ahead of that technology curve because I don't believe that the technologies that exist today for hydrogen are going to be the ones that solve the 2050 net zero targets. So we want to be a leader in that.
Josh king:
As an industry leader and a thought leader and someone who reads a lot, talks to a lot of people and dreams big, when you think about 2050, where do you think the industry is?
Jill Evanko:
The hydrogen industry?
Josh king:
Yeah.
Jill Evanko:
So I think hydrogen is a key part of the total hybrid of solutions. But I'm really adamant that there is not one single answer. The pie is big enough that a lot of these technologies and a lot of these molecules are going to play. If you look at it, nobody's going to go out and rip out all the existing infrastructure that's there today. So I think that he who solves for using the existing infrastructure, whether it's for hydrogen or any of these other cleaner answers, is going to be a key part of that prize that's there. So I won't venture a guess on what percent of the total of energy hydrogen is, but I think it's going to be a pretty big piece of the pie.
Josh king:
So we're getting ready to close out 2021. Listeners are going to hear this episode early 2022. What have you told your team and your investors about the priorities for the new year?
Jill Evanko:
For the team, execute, execute, execute, and for the shareholders it's really staying focused on exploiting the high margin, high growth markets that we are currently well positioned in, continuing to keep a conservative balance sheet and pay down debt through the free cash flow generation, and then going out there and on top of it all layering in big LNG projects that are above the base business. So high growth, high margin.
Josh king:
Well, when you come back for your investor day, I hope to hear more about the further expansion of Chart City.
Jill Evanko:
Hey, we're really looking forward to it. Thanks for having us and taking us on the Chart City tour.
Josh king:
Thanks so much for joining us inside the ICE House, appropriately named for Chart Industries. That's our conversation for this week. Our guest was Jill Evanko, CEO and president of Chart Industries. If you like what you've heard, please rate us on iTunes so other folks knew where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweeted us @ICEHousepodcast. Our show is produced by Stephan Capriles with production assistance from Pete Asch, Ken Abel, and Ian Wolf. I'm Josh King, your host signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next time.
Speaker 1:
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