Everybody for joining us, for the next session. Next up, we've got Chart Industries. Chart Industries is a leading global manufacturer of highly engineered equipment, servicing multiple applications in the clean energy and industrial gas markets. And it's a privilege for me to share the stage with Chart's President and Chief Executive Officer, Jill Evanko. Jill's gonna run through some slides real quick, and then we're gonna have a little fireside chat. Jill, the floor is yours.
All right. Well, thank you, Chase, and it's great to be here today. I'm gonna step back and talk a little bit about the acquisition that we closed this past Friday, March 17th, of Howden, and tell you a little bit about our outlook and walk through what we see for the coming two- years. Starting on our continuation of focusing on execution. If you look back in the last six- months since we announced the Howden transaction, we have executed on time or ahead of schedule on everything that we have said that we were going to do. We closed on Friday, fully funded. We did not close into any bridge or any KPS preferred stock.
We completed our financing in December of 2022, well within our weighted average cost of debt, targeted range of 7%-8.5%. We remain well within that range today, even inclusive of what the Fed may do, in the next steps. We closed a quarter earlier than what was originally anticipated, which gives us a quarter of additional cash flow and earnings in 2023. As we look ahead, we're confident in our cost synergy target of $175 million in year one and commercial synergies of $150 million of revenue in year one as well.
Since we announced the transaction in November, we've been able to, as a combined team working together, within the gun jumping rules, identify additional cost synergy savings that I'm gonna walk through and get out of the gate early, in the last few days since we closed, already executing against our synergy targets. Our pro forma 2023 EBITDA of $1 billion outlook remains unchanged, and we have a calendar year that we'll share with you in a moment, as well as our 2024 EBITDA outlook of $1.3 billion. Deleveraging is one of our top focus points going forward, and we have multiple different levers that we're working on to deleverage to our end of year 2024 target of 2.5-2.9 net leverage ratio.
The actions that we have relate to traditional cash generation actions, and I'd point out that historically, Howden has been a better cash generator than Chart has on a standalone basis. Additionally, above that range, meaning not included in the targeted 2.5-2.9 net leverage range, we have actions surrounding two known divestiture businesses within the combined business that we are currently executing on. I've heard some discussion over the past week in the macro environment, whether or not it's executable to complete these divestitures in the coming quarter or into early of the third quarter 2023.
I can tell you with confidence, obviously, I am limited on what I can say to you today, but I can tell you that the macro environment for these particular assets is very active from both strategics and private equities, and I have the utmost confidence that we'll be able to execute against these divestitures, bringing in more cash to deleverage sooner against our outlook. Moving ahead here, for those of you who are less familiar with the Howden portfolio, it is 100% complementary to the Chart portfolio. The rotating equipment of compression for specialty end markets ranging from hydrogen to wastewater treatment to carbon capture and storage is something that matches not just our liquefaction capabilities at Chart, but also brings us access into other areas of the gaseous markets that previously we were somewhat limited organically penetrating.
In addition to that, I'm super excited about the uptime, the digital offerings that Howden brings into the portfolio, which will allow us to expand our aftermarket service repair capabilities and do so not just across Howden's install base, but also across both of our competitors' install base in terms of being able to repair and service and taking the uptime capability into Chart's original equipment, thereby adding another path for growth. When I talk about the Nexus of Clean, we refer to clean power, clean water, clean food, and clean industrials. Howden fits perfectly into the Nexus of Clean, and you can see on this slide how Howden's products add to our portfolio on the far right-hand side. Not just that, how they help us penetrate the end markets that we already were a market leader in.
That's around hydrogen, giving us gaseous hydrogen access as an example, water treatment, where Howden's aeration systems fit very well, carbon capture, small scale as well as large industrial scale. In addition to that, gives us access to end markets that we didn't have before. One of the things that we love across the cycle is in the combined business, the aftermarket service repair will be over 30% of our total revenues at low 40% gross margins. We have multiple different end markets that we can serve with the same product offering. The same products that you saw on the prior page that four or five- years ago were used in more traditional oil and gas applications are now the same products that are being used in this variety of different end markets.
I'm very excited about having access to end markets such as energy recovery, such as nuclear, even the electrification from a mining perspective, as well as the decarbonization of mines with Howden's Ventsim product. I'll tell you a little bit more about that, but let me run through the numbers. First, there may have been some confusion in this deck, and I just want to clarify that the numbers that we have said for the last 6 months around our revenue, our EBITDA, and our deleveraging figures are all reiterated. There is no change from what we originally said to what we're showing today. The slide that you see on here is around our calendar 2023.
I would point out that as I started my commentary on additional cost and commercial synergies identified, we've left ourselves room to exceed what you see on this page in 2023. That's also net of the cost to achieve these synergies shown in the calendar year of 2023. We get nine- months of Howden, 12 months of Chart, and then the pro rata on these synergies. I'm very excited about how we look at the year, how we've gotten out of the gate, and again, in a moment, I'll tell you some of the things that we've accomplished in the last four days already.
What I would say is if you looked back to the February 24th Chart standalone earnings call, one of the things that we attempted to articulate on that call was that our 2023 Chart standalone outlook had six different things that gave us confidence in achieving the range that we put out. We wanna make sure that you're hearing the confidence that we have not only to achieve the standalone outlooks but also the synergies that we've identified. The big box in the middle of the page, what's not included here, I'm gonna reiterate our confidence in getting these two divestitures done in the next three to five months remains high, even in the current market conditions, and that's not included in the free cash flow available for debt paydown.
The commercial synergies for 2023 are not included in these figures here. Again, reiterating what we've said before, pro forma 2023, $1 billion of EBITDA. In 2024, $1.3 billion of EBITDA is our outlook. Demand is strong. What I would tell you is that we have not seen in either business, and certainly now we're seeing even more momentum in the combined business, we've not seen any slowdown. That's a broad-based comment across our end markets. Howden had record Q4 2022 orders and full year 2022 record orders. Chart had record full year 2022 orders. As of last Wednesday, March 15th, Chart standalone orders quarter to date were $520 million, and Howden's orders through the end of February were exceeding the original forecast.
When we talk about our customers and our banking relationships, I do think it's worth just taking a moment and noting that the combined business and neither of us on our own had exposure to any of the banks that you're hearing about having challenges, so that's SVB and Silvergate and First Republic. Nor do we have outstanding receivables with any customers that pay us from those, from those institutions. Lastly, as I've already commented, deleveraging is a focus. We reiterate our financial policy that we will not do any material acquisitions or share repurchases until we are well within the targeted high twos range as forecasted for the end of 2024, and that we do have multiple actions underway.
I can go into a lot of detail on what those actions are around cash generation, and that is something that ranges from a daily working capital management call across the globe that we do, all the way through to implementing inventory reduction standards with our suppliers that have started as of Friday in the combined business. Backlog is for both businesses coming into 2023, the strongest that it has ever been to cover the % of the following year's revenue. What that means is there's a typical range of available backlog for the following year. As both Howden and Chart headed into 2023, we had higher than typical coverage for the 2023 revenue forecast in our backlog than we would typically have.
One of the things that is important to note and is important to our confidence in the growth across the cycle, regardless of macro conditions, is that the businesses have different balances between the length of project-based business and the amount of project based business compared to shorter cycle book and ship. Howden is a shorter cycle book and ship business and also has just under 50% of revenues in aftermarket service repair. Chart has, over the course of the last few years, tended more towards small, mid, and large scale projects, which have a duration that's typically longer than 12 months. That balance, A, gives us the visibility I just described, and B, it gives us more leverage to pull to continue to grow across the cycle.
Howden's ending backlog as of 12/31/2022 of $1.3 billion, more than 53% of the 2023 revenue is covered in that backlog, which again, is higher than they would typically have. That backlog is flat to September 30th. A one-to-one book and bill style ratio is typical in that business. I included a slide here. I'm not gonna read you. I won't bore you and read you all these bullets here. It's pretty great to see, I'm really excited. I've had the chance over the last four days to spend time again, with a broader set of the combined teams and see our combined executive staff in action.
The amount of excitement in the business and from our customers is something that is hard for me to convey because it's just coming at us on a minute-by-minute basis. You can see that we've already had numerous inbounds from our customer base. New customers that are excited about having the offering combined. For example, hydrogen refueling stations in South Africa, a very large South African public company that is looking to implement green hydrogen refuelers, is talking to us as of Friday afternoon. We have an opportunity for Chart in Howden combined equipment on a hydrogen project in Ghana. We've seen international oil companies that were working with one or both of us on renewables coming and asking for a combined meeting.
I would also point out that we, after years of having LNG onboard vehicle tanks, which typically have only been used in Class eight commercial truck applications in Europe, for the most part, on Friday afternoon, we did receive a commitment for LNG onboard tanks with a mine in India that's working on decarbonization efforts. Howden's presence in that space is bringing us more and more opportunity. On the cost side, you know, certainly staying focused on what we said we were gonna do and when. Day one, day 30, day 90, 180, and at the end of the first year is a hyper-focus for this management team.
Having the combined executive staff ready to go on day one, and those who were not gonna stay with the business gone, is the first step in that. That was achieved right out of the gate after we closed Friday morning. In addition to that, we've already begun supplier conversations across both supplier bases and, from an engineering perspective, exchanged test opportunities, brought some of our backlog in-house, so backlog that we hadn't subbed out, we're now utilizing the combined business capability. Plenty of cost actions already underway in the past four days. We do think in our world of Friday to Monday night is four days, and that's how we're gonna continue to execute against the synergies here and deliver upside to our commitments.
I'll conclude my prepared remarks with, again, our excitement, not just on being able to deliver what we have said to date, but also what we intend to deliver in the next two years. That's across the board, reiterating what we say on the EBITDA, on the synergies, on the deleveraging actions, but more than anything, you know, going from day minus one to day one, doubling our engineering capability, our ability to service around the globe with 41 service and repair centers and taking that to the next level in an unparalleled, very, differentiated business with both stationary and rotating equipment. I'm super excited, I'm very ready to go.
I think our team is saying, "Hey, Jill, let's get moving." The ideas before I walked in the door, had another 20 emails from Howden team members around the world saying, "Get me the install base in this region because I'm gonna deploy ASAP on aftermarket parts." Really exciting times in the Chart business. From my chair, I've never been more confident in our ability to deliver what we say we're going to do.
All righty.
They told me not to fall on this step.
Well, thanks, Jill. Appreciate the update post the close there. You know, some of the questions that I wanted to kick off with to clear up some of the market concerns you did in the slide deck. I guess kinda one more, you know, I guess let's start on, you know, deleveraging the balance sheet before we kinda get into the business, because I think that's the number one focus of investors today. You've disclosed that you know, I believe you have about $4.2 billion kinda net debt post-close. Some of that is on the revolver. You know, I think your plan was to obviously sell, you know, assets or sell those businesses and pay down the revolver. You spoke to that.
I guess maybe just talk about, we talked about this last week, but, you know, you've got a couple of businesses that you're selling, and there's concerns that you may not be able to sell or they may not be able to, you know, raise, if they need to raise debt or anything. Talk about, you talked a little bit about this, but strategic buyers versus, you know, asset buyers and, you know, kinda help investors get a little bit more comfort in kinda selling the $500 million of business.
Yeah. I would step back and say that we've actually had. In fairness, there's only so much I can share given where we are in the processes. You know, we've had more interest in both assets than what the bankers had originally indicated we would have. One is a smaller asset, one's a larger asset, so you'll see disproportionate proceeds between the two. Adding up to the approximately $500 million of proceeds is our targeted outcome. With that, we are seeing in the smaller business, it's a nichier business and neither business impacts synergies, so that's a positive.
I think one of the things that I would clarify as well is, in our range that we've put out for the year, while we say the divestiture proceeds are not included for deleveraging, we still feel that when that EBITDA is out of the business, that we still can accomplish the EBITDA range we've put out. Strategic buyers, multiple strategic interests on the larger business of the two. These are industry folks that are plenty familiar with the asset and are able to move very quickly. That gives us confidence as well in our timeframe. In the smaller business, strategics and private equity, I think ultimately in the smaller business, probably more suited for a private equity, just given the smaller scope.
Good movement there and good progress, and I think that you would see us execute certainly in the range that we've put out. You asked me last week, "Hey, would we accelerate if we had a lower price point on these assets? Would we accelerate that and make the decision to take a lower price to bring the cash in?" My answer to Chase on that was, it's a balance. Like, there's a point where we might, but given the amount of interest that we have, we don't feel that we're gonna need to be at that decision point. As a slight tangent, but I think captured in the first part of your question, is we feel good about the liquidity that we have.
We're glad we went to the markets in December because we certainly wouldn't wanna be doing that now. We don't foresee having to go to the public markets, for any liquidity in the near term.
Yeah. Yeah. Yeah. I mean, you've got a billion-dollar revolver, so, you know, that was expanded up to $1 billion. One more question on kind of deleveraging, and you've got 2024 converts, you know, due, the latter November of 2024. You know, you highlighted the free cash flow. You know, if you look at the free cash flow, I think it was $275 million-$325 million was the number you put up there. That's calendar year. I'm assuming, you know, that could go towards paying down the 2024s. I don't know if that's the plan or not.
I don't know if you can say, but just to kind of highlight to everybody when you think about, you know, revolver how you plan to pay that down and the 2024 converts, you know, with the cash flow that you have to be able to pay that down.
Yeah. I think, you know, there's a strong interest in the 2024 converts going away probably sooner rather than later. What I can say broadly is that now that we are closed and we have multiple opportunities in the, in the near medium term here to optimize the balance sheet, our strong banking relationships with J.P. Morgan and Morgan Stanley, just to name a few, all have been actively coming to us with various different ideas. You know, we were oversubscribed in the debt, so various different levers that we could pull, but we will be opportunistic about how we do that, so that we make good decisions, and we leave ourselves the liquidity that we need. Certainly, one of the things that we are reviewing is how we handle the 2024 converts.
Awesome. You know, one other question I get, you know, is just kind of how these businesses would perform in a recession. Hopefully, we don't go into a recession, but obviously credit markets have tightened up, so getting lots of investor questions around that. Could you take a minute and just kind of walk through the legacy Chart business, Howden business, kind of how they perform during a recession, which parts of the business you would see the most volatility or the most downside in a recession scenario?
Yeah. Let me start by saying that we are seeing no indications in our end markets or from our customers that there's any type of softening or slowing. That may be particular to our business, but we're not seeing that at this point in time. When we think about the recession, you know, at one point when we were back in November, December, describing kind of what was the worst-case down cycle that either business had experienced back in 2015, 2016 timeframe. Remember that we're very different business today than we were back then with multiple different end markets, multiple different levers to pull, as well as one of the things that, you know, is a drumbeat for our business is being 30% aftermarket service repair gives us a lot more resiliency across the cycle.
Less peaky trough-y type of activity that you would see. To specifically go into the respective businesses, when you look at both Chart and Howden over the prior few years, even through COVID, our industrial gas business was down, I think, 1%. The Howden aftermarket service repair was consistent through that period of time, as well as the OEM being flat or a little bit up. That should be a good indicator of what it would look like in kind of the nowadays version. If I peel that back a little bit further, when you look at the Chart business, we would look at it as industrial gas, traditional energy, and then what we refer to as specialty when we're referring to OEM or new builds. In those, industrial gas is pretty darn resilient.
You know, -1% to +7%, 8% is kind of your range in good times and in bad. We can tell you that the industrial gas folks have year-to-date been buying as actively, in some cases more actively than in a typical Q1. We haven't seen that slow down from them. On the traditional energy side of the house, we had started to see a recovery in our air cooler business for traditional applications, upstream, midstream. I think that's one that you watch oil, you watch WTI, and you see what happens there. We have not built, I think we built 3% growth in our model for 2023 in that business. That one's a little more tied to what happens in a recession or not.
Specialty, just so many different levers to pull in specialty. I'd answer the recession question the other way is backlog is so strong. What in backlog has already started to be worked on and we're being paid for versus is waiting on getting funding or waiting on the IRA or anything like that. You know, the super majority of our backlog is already underway in terms of that a minimum engineering work around it. That's a key metric that we watch. In both the Chart and the Howden business, we have sub 1% cancellation rates. We haven't seen cancellations, neither has Howden. If you look at the Howden, I already talked about aftermarket service repair, about 44%-48% of the revenue.
On the OEM side, where specialty markets like we're describing in book and ship style markets are pretty resilient in their business. I would watch things like carbon capture applications. Now, that would be something that would be the same for Chart, right? Okay, this is a business that is very embryonic, very nascent, is it gonna take longer to get where we're forecasting it to go? If you look at that in our 2023 numbers, It's de minimis in both businesses. Those same products. What I love about both businesses is those same products can be used in multiple applications. It's not like we have to stop making a blower if the carbon capture market doesn't go the way we want because the blower is used in water treatment, it's used in traditional energy.
There's a lot of ways that we can adjust if we see demand in one market start to lighten up.
Yeah. Can we kinda just come back to the deal dynamics and kinda the strategic rationale behind the deal? I know that you've talked a lot about this, but there's a lot of new investors, maybe it's worth kinda just taking a couple of minutes and kinda refreshing everybody on the strategic rationale behind the Howden business.
Yep. If you look back, we've known the Howden business for many, many years. I guess good and bad. Howden was in the private sector for the last four- years, and therefore, the strategic pivot that many investors saw Chart go through over the last four to five- years in the public domain where every move we made was available to be witnessed, Howden didn't have that. Investors when traditionally have anchored on what it looked like coming out of Colfax. Well, Howden in the private sector has gone through the similar, if not the same, I'm almost inclined to say the same, but very, very similar strategic transition that Chart has gone through.
We know the business really well because as I commented in my prepared remarks, you have a high level of complement between our business and theirs. In a lot of cases, for liquefaction, we would utilize a Howden compressor. The businesses got to know each other in that respect. We watched that strategic pivot happen, and the complement became more and more evident as they transitioned into these Nexus of Clean or clean energy end markets. Over the course of the last couple of years, we have been watching and waiting for an entry point. We had that happen in the middle of last year, and we announced in November this agreement.
I believe that you have a lot of people will be skeptics and say, "Well, it wasn't well-timed given the macro environment," et c., et c.. We're positioned in a way that there is no competition to this combined business. Having that in the portfolio now and the amount of strategic interest in some of the pieces and parts that we just talked about, furthers our ability to get ahead in some of these more nascent markets and be the market leader in all of these equipment and solutions. It's been something we've wanted for a while under the radar, and when it became available, we felt like it was a good time to strike.
Yeah. Could you just speak to the compressor market and the business and why it's really so important that you wanted to get into that business? Maybe talk to the competitive positioning of Howden versus its peers.
I think there's a little bit of a misperception that compression as a market is just one big bucket. Compression is very varied across the different types of applications, the machines that are there, the sizes of these machines, and how they are used. One of the things that was important to us was that we know in, like, the big, super large project market, take big LNG, right? You're not gonna displace the folks that are already there providing compression, but rather, those folks actually, Howden's compressors are complementary to their offering. We wanted to target the compression for specialty applications, and these are smaller machines that can handle molecules like hydrogen, it's a different handling than handling LNG as an example. That was our target base.
When you look at the competition to Howden in these compression arenas, you'd have NEUMAN & ESSER, you'd have an Atlas Copco, those Burckhardt, versus having a Baker or Siemens. That to us was important because that's the focus of the markets that we think are gonna grow the fastest, first of all, and we wanted to have in-house the mission-critical equipment that was the longest lead time in the projects that we were doing, and compression is the longest lead time in the projects for hydrogen liquefaction, helium liquefaction, and so on. A lot of cases, we win on lead times, and having that within our control was something that was really important to us.
Lastly, I would say that, you know, certainly, cost synergy, immediate cost synergy is not having to buy out compression for projects that were awarded in the specialty arena. Having that in-house is an immediate cost synergy. Pretty excited about it. We love the targeted market, and we also love that we can continue to play with the larger compression suppliers.
You've been on the road, you know, talking with some investors. What's kind of been the feedback from investors, and what do you think investors are missing about the deal?
Yeah. Let's see. We'll have the line of my answer be 1/1/2023.
Okay.
Up till 1/1/2023, the discussion, the focus was really around, can you get the financing done in the debt range that you say you're going to? We did that, but that was really it for the stub period, November 9th to 12/31. 1/1, focus has turned to, "Okay, let me understand the strategic rationale of this combination." To a T, everyone that we have spoken to understands that. Whether they understand it with explanation or just knowing the two businesses, it is very varied. Understanding the details of how detailed we are on the synergies and our confidence level in achieving those, I mean, this was not a synergy number that we just applied a % to cost of goods sold and said, "Hey, let's go after it.
Let's figure it out once we've closed." I mean, this was literally built bottoms up, with, you know, specific functions, head count names, suppliers, and so on. I think having that confidence, I mean, for me to be able to convey the confidence that I have in this combination is something that's really important, I think, for people to hear, and, you know, certainly, executing against what we say we're gonna do. I think a little bit of it too is, hey, let's Now that we've closed, and, you know, one of the things that somebody asked me on Friday was, "Well, if somebody sold today, do they really believe in the combination?
Do they even wanna see it through?" My answer was, "Well, that's their prerogative, right?" I viewed it as an opportunity to get more Chart stock, and let's go and show what we can do here. I think that you're gonna see us deliver not only what we say, we've laid out in our targets but also be floored by the amount of synergies between the two businesses. We haven't really spent a lot of time even on the commercial side. The amount of inbound since Friday till today on the commercial side, especially outside of North America, is lining out as I would have expected, but better certainly than the teams had in their commercial synergies.
Yeah. Last one on Howden, and then I wanna kind of transition and talk kind of more specifically on some of the clean energy and LNG stuff. obviously, Howden, big acquisition. you know, what's the integration plan? How are you getting employee buy-in? you know, how do the two cultures kind of fit together?
It's a really neat thing to watch 'cause we deemed ourselves OneChart, and Howden had deemed themselves one Howden. Like, even the lingo kind of coming out of the gate was really well aligned. You have two very similarly sized business, not just from financial metrics, but also from a number of team members around the world. You know, we had yesterday, I held town halls, and the positivity, the ideas that flowed coming out of just an initial, "Hey, this is how we think about the business." People know the two businesses. We work together, they're ready to really roll.
One of the things that I do every day, have done every day, seven days a week since May 2, 2020, the beginning of COVID there, is send a daily shout-out to one or more of our team members around the world. I have not had a day where I don't have a nomination for that daily shout-out. As of Friday, when I started that in the combined business, I've already gotten seven shout-outs from Howden people. So you kinda get that sense that this is a similarly minded group of team members that are working toward the same thing. I also think that the things that they're very good at and we're not as good at, I reference cash flow, right? They focus on deleveraging.
They lived in a world that generating cash was really important and, you know, we got a little bit fat on our inventory. Bringing those types of skills together, I think are gonna go a really, really long way. Integration being led by Howden's former Chief Operating Officer, Massimo Bizzi, is fantastic because not only does he have that drive and that understanding of operations and operational excellence, he also has the relations with the employees deep into the organization. That's something that he as my partner in this is, I believe, gonna make us very successful. Well, we're gonna be off to Germany tomorrow to visit one of the Howden sites and the combined staff being together.
This is a team that's eager and excited and, you know, one of our premises was you have to want to be here to deliver the results. That's also, you know, shed some people on day one too. I think that having the right attitude is half the battle. Knowing the businesses, like, we don't have to teach each other because rotating and stationary work together in these applications gives us a leg up right out of the gate.
We got, like, five minutes left, and we've got four topics I wanna cover between LNG, hydrogen, water treatment, and CCUS. We'll talk really fast. LNG. You know, I think people are beginning to appreciate, you know, the longer tail with LNG, and, you know, just the cleaner fuel aspect there. There have been some concerns that LNG projects sanctioning could stall. We officially saw VG Plaquemines Phase Two earlier, was it this week or last week? We saw Port Arthur, Sempra's Port Arthur last night. I haven't seen a press release out, so I'm not sure you can say anything, but it looks like that, you know, we're still gonna have LNG, believe it or not. It's good to kind of see that.
You've had some small scale LNG. I think if I've tried to add some of this stuff up from last year, you had, like, $400 million plus of small scale LNG, so really strong orders there, which was additive to the $600 million plus of the big LNG that you had. Maybe take, you know, 30, 40 seconds to kind of lay out the landscape of what you see for the LNG market, you know, over the next two or three years.
Yeah. I think your comment is spot on, that there was a question mark about the tail of especially the big LNG. We have a high level of We're bullish on big LNG continuing here. You know, again, like you said, Sempra's Port Arthur FID is just kind of the start of what we think we're gonna see in 2023. Globally, but I believe it'll be more heavily tilted to U.S. Gulf Coast. Included in that is included in my bullishness is the small scale and the floating LNG. In January, we booked a $115 million small scale series with an Asia Pac EPC, and we're starting to see much broader opportunities globally on the small scale, not just North American, which is where it was before.
I think that, you know, I've said in the last few weeks, as recently as last week, that I think we'll see at Chart, at least one release this year in the first half, and certainly two or more is what we're targeting. What that does is it keeps that higher kind of what we call icing on the cake of the big LNG revenue and earnings for longer, not just a drop off in 2025 or 2026. I think that's gonna continue into 2024.
Okay. hydrogen real quick. you know, hydrogen orders were strong. They were up again last year. you know, IRA, you know, we'll see, you know, with IRS and kinda what happens. I guess maybe that's what they say in April. you know, what's your outlook on hydrogen and continued order momentum, you know, for 23?
Yeah. I think hydrogen's gonna continue to build, not just in 23, but for all the years to come. That's my view on this. We're seeing a movement from just production into storage and transport and end use. Prior to 22, we never saw basically end user buying anything from us, whether that it was a fueling station or an onboard tank. Now we're starting to see much more of that on balance with these other two value chains in the molecule. I think, you know, we'll continue to see some liquefaction. What I'm probably most excited about in hydrogen in our business specifically is the access to the gaseous production now that we have Howden. That was, you know, that's the industry itself has evolved that it's gonna be both gaseous and liquid.
Gaseous is certainly the larger percent of that, at least in the here and now. I think that gives us a ton more opportunity to grow our order book in 2023, comparative to 2022. Our commercial team has a target of increasing orders, combined orders 20% this year over last year. That's what we've agreed on as a target, and that's gonna be what our measure of success is.
All right. We've got a minute and a half left. I want to hit on water treatment. It doesn't get a lot of air time. You know, you have a great PFAS remediation solution. The EPA's proposed drinking water limits on forever chemicals. How could this, you know, help your water treatment business?
Yeah. It's, it's actually an exceptional help. Sometimes you hear me when I talk about government policy, I'm balanced in the sense of whether it actually helps or not. In this case, I think it really does help. The AdEdge water technology that we acquired a couple summers ago is specifically targeted to PFAS, PFOS. That came out last Tuesday, and by Thursday, our water guys had said, "We're being called all over the United States because these guys have 70 sites or 50 sites that they've got to address." I think it's gonna be a kickstart in what was already records off of a small base, in fairness, on water, but I think it's gonna really accelerate our water demand. That's a, that's a very nicely profitable business for us.
You throw in on top of it, Howden's equipment that goes into wastewater and water treatment, and we have a larger starting point package with a broader, audience that's being mandated to do something, really sets the stage well for us in 2023 for water.
Yeah. Yeah.
Oh, that's amazing.
Right there, right at the end. I mean, when you think about Howden and Chart and your Nexus of Clean, we didn't get to walk through all that. I believe that it basically doubled your TAM. Just wanted to make sure that everybody kind of understood that. I mean, there's a lot of synergies there and a lot of opportunities that Howden brings. With that, I'll turn it over to you for any closing remarks.
I think you covered it really well on the topics that I wanted to hit on, and just reiterating our readiness to execute against what we've put out there and our reiteration of the outlook as well as our focus on de-leveraging, all being priorities for us. I think, you know, you're gonna see just incredible things come from this combined business. We didn't even get to hit on regional synergies in locations like South Africa and Chile and South Korea. Please continue to listen and hear as we deliver against the commitments we've laid out. Thank you.
Yeah. Thanks, Jill. Appreciate it. Thank you.