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Joe Brinkman

There is no showed the fourth quarter 2020 for the promo for full year 2024 metrics are in the appendix on slides 16 and some to for the full year 2024 orders, sales, gross profit dollars and margin operating profit dollars and margin EBITDA dollars and margins and free cash flow were records.
Fourth quarter 2004 sales of $1.11 billion increased 10.1% each quarter in 2020. For sales sequentially increased and full year 2020 for sales for $4.16 billion was a year over year organic increase of 17.5% with a negative 0.6% foreign exchange headwind.
Reported operating income in the fourth quarter was 188,300,000.0, and one adjusted was 243 $4 million or 22% of sales, supporting the full year 2024 adjusted operating margin of 21.1% increase year over year of 400 basis points for the second half of 2024.
Adjusted operating margin was 22.1% compared to the first half of 19 9%, reflecting synergies flowing through the P&L as well as leveraging SG&A. Adjusted EBITDA for Q4 of 200 to $3.6 million contributed to our full year 2020 for $1.014 billion or 24.4% of sales when adjusted for an increase of 330 basis points.
We also continue to have confidence in our mid 30s gross margin percent medium term targets. Fourth quarter 2020 for free cash flow was $261 million, contributing to our end of the year 2024 net leverage ratio of 2.8.
On Slide 10, we reiterate our financial policy that until we are in our target net leverage ratio range of two to 2.5. We do not do anything share repurchases or material. Cash for acquisitions as reflected in the second half of 2020 for our CapEx spend is now normalizing, and we expect CapEx to be approximately $110 million.
Net working capital, defined as accounts receivable inventory, accounts payable, unbilled contract revenue, customer advances and billings in excess of 3% of trailing 12 month sales improved to 13.4%. We continue to look to optimize our capital structure and took a step toward this in the fourth quarter 2024 by four fully settled living our convertible notes that came due in November 2024.
Additionally, our minority investment in age deck, we have a portfolio option that could have been exercised following this September 2020 for three-year mark, we have signed LOI to modify the option so that it will be structured similar to the 2021 option, and it will not be exercisable until 2028. Therefore, we do not expect any balance sheet impact for cash back from the option until at least that time.
Moving to slide 11, we'll provide some color around the segments in set to our reiterated 2025 outlook, starting with crowd tanks solutions or CTS. fourth quarter of 24 CTS. orders of one or $38.5 million decreased 11.9% when compared to the fourth quarter of 2023, primarily driven by softer European industrial gas demand in the fourth quarter of 2023, having three customers that ordered a larger projects in the Americas, demand to start 2025 and the commercial pipeline for 2025 in CTS. is picking up and expected to drive year over year increases in both orders and sales.
Q4. Cts sales of $150 million decreased 26.4% when comps to the fourth quarter of 23, which had approximately 17 million of specific project sale that did not repeat in the fourth quarter of 24. Reported gross profit margin of 24.4% for CTS. increased 210 basis points compared to the prior year.
Continued efforts in efficiency in operations improvements driving improvement in gross margin in 2024 for the full year and EPS of 140 basis points and heat transfer systems or HTS. the fourth quarter order sales, gross profit, gross margin, operating income, operating income margin and EBITDA and EBITDA margin were records for the segment for that quarter in any quarter in our history.
With that said, we continue to expect to HTS. orders and sales to grow 2025 over 2024, driven by a traditional energy as well as LNG. Fourth quarter 2024 HTS. orders of $536 million increased over 66% when compared to the fourth quarter of 2023, driven by the large LNG Phase one order that we got as well as grow growth in the order book for all of our HTS.
Excluding the Woodside order, HTS. orders still grew in the fourth quarter of 24. Asia sales for the quarter were 288,800,000.0, which grew 14.2% compared to Q4 23 and had associated gross profit margin of 31.8%, the highest quarter of the year for HTS.
Moving to Specialty Products. Fourth quarter of 24. Specialty Products orders of $509 million increased 27.7% when compared to the fourth quarter of 23, driven by orders and carbon capture, energy recovery, infrastructure and space exploration each more than doubling compared to the fourth quarter of 2023 quarter of 24.
Specialty product sales of $317 million increased 47.7% when compared to Q4 23, driven by a combination of meaningful increases, meaning 30% or more in sales and carbon capture, hydrogen LNG vehicle tanks, infrastructure, water treatment, space exploration, energy recovery and marine. Reported gross profit margin of 27.4% decreased 120 basis points when compared to the fourth quarter of 23 and specialty, although gross margin increased 110 basis points sequentially compared to third quarter of 24.
For Q4 2010 for gross margin reflected specific third party expenses and inefficiencies in our startup was incurred, which we incurred at the Theodore. Alabama are tending to facility.
Looking at the full year specialty products, gross margin and 27%, if we did not have the inefficiencies related to the hedging costs that I just referred to, Specialty gross margin would have been approximately 29% repair. Service and leasing.
For the fourth quarter, orders were 389 million, which increased 14.2% compared to Q4 2023, driven by general strong aftermarket trends as well as a $25 million retro-fit order for a utility this past year, we saw consistent in retrofit service and repair awards. We have good visibility to more ahead for 2025.
Q4 RSL sales of 351 million increased 4% and associated gross profit margin of 40.8% was in line with our typical gross profit margin. In the RSL segment, Q4 ourselves contributed to growth in the full year 2020 for ourself order book of 10.55% year over year and sales growth for the year of 19.2%.
Ourselves now approximately one-third of our business and increase from a few years ago in the low teen inherently high single digit to 10% range, driven by multiple actions that are underway to give a few examples of those actions.
Those are around covering our install base globally in geographies that we have less clear rent coverage, penetrating our digital uptime offering and coverage, including deploying digital uptime on products such as Earthly Labs or because in LNG foods and continuing to drive LTSAs and framework agreement increases. As we've discussed earlier.
So finally, moving to Slide 12. We reiterate our prior 2025 outlook. As shown here, I want to point out a few 2025 considerations about the outlook. Our strong December 31st, 2024 backlog, including the Woodside L&G Phase one order that we referred to, as well as a few specific larger orders received quarter to date in Q one, such as the mining order I referred to in a strong start to the here in the space.
Exploration end market supports our backlog conversion for our full year 2025 guidance range. Offsetting the potential negative foreign exchange impact that it holds as it is currently for the full year would have an approximately 2% negative impact on sales, faster conversion and in commercial pipeline, conversion to backlog would be key contributors to achieving the higher end of our outlook.
We anticipate the second half of 2025 to sequentially increase when compared to the first half of 2025. Our first quarter is anticipated to be our lowest quarter of the year, as is typical. Additionally, the first quarter of our year is typically a use of cash given the timing of insurance taxes, bonuses and our senior note interest and other seasonal cash uses. As a reminder, we have our semi-annual occured interest payment of approximately 79 million in the first and third quarter of 25.
Regarding tariffs. This is not explicitly in our guidance as there is little clarity yet on the breadth and specificity of the actions as well as the length of their respective durations to offer a point of information based on our work on this topic done to date, internally, potential growth impacts from tariffs as we understand them today, would fall within our EBITDA range.
We also want to point out a few things that we have done and continue to do to mitigate impacts from tariffs. We believe that we are much better positioned today, not only for tariffs, but also potential supply chain disruption following the last round of tests as well as the supply chain challenges of 2021 and our associated actions taken subsequently around multiple sources of supply and regional as well global supply structures.
As we referred to before, we have flexible manufacturing and flexible supply chain in our business. We worked very hard on instilling our chart business excellence or CBE. process, and we're seeing traction from this effort. And as a reminder, we are the only manufacturer of brazed aluminum heat exchangers in the United States, including world's two largest variances in our facilities.
We have a strong air cooler and fan manufacturing footprint also in the United States as well as the world's largest shop build cryogenic fabrication in our Theodore, Alabama facility. Strong United States manufacturing footprint can also help our customers as they navigate their supply needs.
Before we open it up for Q&A, we want to take a moment to share. There are enormous thanks to our global one to our team members for their focus to execution and dedication to accomplish this past year's results and for the start to 2025. Thank you all for all of your efforts and now enough to please open it up for Q&A.

Question and Answer Session

Operator

(Operator Instructions) Saurabh Pant, Bank of America.

Saurabh Pant

Jill answered on identifies talked a little bit higher level on 2025, a guide. I know the revenue guidance unchanged despite the FX headwinds, which is good to see. Can you maybe just to just remind us of how you're thinking about the four segments?
I know you talked about data at your Capital Markets do at a video you through that auditors, it's still grow high single digit to 10%. But maybe if you can step through some of the other segments as this one is looking better or something else is slightly offsetting. Just walk us through that?

Jillian Evanko

Absolutely take sort of on. So you commented on ourselves and we see many, many actions that are well underway to to achieve that and consistently achieve that ahead is our expectation in ourselves segment on in HTS., we expect growth in 2025 or 2020 for LNG as a driver of that. So we would expect LNG sales to be higher in 25 compared to 2024.
We also see just traditional energy applications, E. and being very active right now in particular, when we talk to our customers the last couple of months here. And it's really around we're going to take this opportunity under the current administration to us to build out the the energy framework, but also just this growing demand for on for all things, energy, energy intensity around app locations that we are about every day, whether that's data centers or whether that's provide L&G globally.
So on that, that HTS. segment, we expect to grow with a tailwind from L. and GNCTS. really said traditionally for CTS. is this is kind of our low to mid-single digit grower. We would expect to see see approximately mid-single digits two in the CTS. segment, and we've seen a good start to Q1 in terms of on CTS. orders.
And then finally, in specialty backlog, conversion on specialty is the key driver to our expected growth in that particular other segment. We started to see some improving backlog conversion in 2024 in the specialty segment and expect that to continue to pick up the pace, especially with some of these carbon capture projects that we've referred to and from the orders that came into the order book in the second half of 2024. So we anticipate growth across each of the four segments in 25 when compared to 24.

Saurabh Pant

Okay. Fantastic, July. And then I know you just talked about the bridge two years of LNG contributing to growth over the if you can dive a little depot, as you know, Dr. Lindsey side of things, especially big LNG. If you think about what's in your backlog, how that converts to revenue in 2025, how should that at all?
Or part of the reason I ask because it's it's a full solution offering, if it's IPSMR, by the way, it's good to see good, really good traction project starting up. And how does that change watch So out of backlog Macsteel 25 versus 24? And then what does that mean for HDS. margins?

Jillian Evanko

Okay, US versus July. I really thank you for pointing out the IPS, our attraction. We're thrilled with with the what's happened to date in terms of the first first liquid and the first cargo for seniors, Corpus Christi Stage three, Project New Fortress Energy sharing that Fast LNG is producing a meaningfully above nameplate capacity. So gaining gaining traction has been positive, including any any floating project.
So on to address your question directly, what you see a big LNG project announced coming into the order book. What we would anticipate typically in those projects is revenue meaningfully start approximately six to eight months after the order comes in, there's a bit of on revenue around engineering and maybe some order material ordering for that.
But in terms of kind of the cadence of when it really starts to be consistent across coming quarters, it's that six to eight month mark, in terms of what we would expect in 25, the timing of of Woodside, obviously, we referred to it being a Q4 24 order seeing kind of apply that type of logic to it.
Also having having strong global LNG backlog, not only around big LNG, you'd expect we'd expect that to flow through the year with a first half to second half step up just simply because of the Woodside timing and LNG projects are nice contributors to our HTS. segment margin in particular when they utilize IPSMR.
And so that is another factor in how we anticipate to to achieve our 2025 growth and margin for the total company. Any with HTS. being a key contributor to that gastric cancer has done for that color.

Saurabh Pant

I'll turn it back. Thanks, Eric.

Operator

Ben Nola, Stifel.

Ben Nolan

So Sergio, I wanted to start off on CCS. Richard, it was a little lower, but it sounds like 1Q is going pretty well. I know that I know that China is a big part of that particular business.
Tom, are you seeing well, I guess the improvement that you're seeing, is it in China and elsewhere? And can you maybe talk through how you're thinking about the China exposure and sort of or how that fits for broadly was reported to you have going on?

Joe Brinkman

So so let me just hit CTS. first and then I can take China broadly. Second, in terms of CTS. so far, I'm pleased to the start of 25, especially coming off of declining and declining orders and sales year over year in the fourth quarter in this segment, which interestingly enough, the second half of 24, we did see industrial gas slowdown in China, which would impact CTS., but also we saw kind of the summer slowdowns in CTS. in Europe as well.
And I'm not no real chunky orders in Q4 of 24. And in that segment, the team is the team is feeling good about order and sales growth in EPS for 2025.
And so we'll continue to monitor that closely. Not only specific to China, but kind of globally really pleased to have executed that LTA. yesterday with one of the on the ag majors.
So those types of things also help us have on visibility to the forecast of first quarter in China. Obviously, you have Chinese New Year in there, but we're seeing consistency in China right now. And I think the other part of the question earlier that I want to address is around supply chain in China, in particular, we're not dependent on China supply chain.
We have other sources of supply very regionalized in our supply chain, really as a result of the actions that are global sourcing team has taken since 2021. And we'll continue to dynamically assess and make those sourcing decisions based on the market conditions. But we feel we feel positioned well to on to be agile in response to what's happening in China.

Ben Nolan

Great. And then just another quick one for me. Appreciate the color that you have on our user and a lot of it to come. And can you maybe just frame out how big of a business that is now just so that we can document understand a little bit about what it could be for you?

Joe Brinkman

Yes. So maybe to give a sense of kind of what the size of and are you could be there is, I guess in terms of content, depending on the size and are you going to be anywhere between approximately $20 million of Chart content to could be upwards of $75 million per NRU? It just depends on the scope of the application, et cetera.
And definitely in areas that we have seen a meaningful increase in terms of customer inbound around this, yes, the CapEx decisions then, but it's also an optimization and efficiency spend for these plants on the currently, it's not a very large portion of our business. You'd have you you would have had EUNRU.s in any given type of the year, but we would expect that to step up meaningfully. And what we've had to date has been toward the lower end of what I described and are used to be built out our time.

Ben Nolan

Very helpful. Appreciate it. Thanks, Joe. I think then appreciate it.

Operator

Scott Gruber, Citigroup.

Scott Gruber

Based on the Brazil, com was spot on aftermarket on your the so the growth you're 24, but your last couple quarters kind of flattish, since you mentioned the strong start to the Enbrel in 1Q. Can you speak specifically to the growth outlook for aftermarket and 25? Will it be in line with the for the high single digit longer term partners who have slowed renewed discipline from an order perspective of early near them to make that happen?

Jillian Evanko

Yes, yes, on a sequential and of Q2 to Q3, Q3 to Q4 in terms of RSL, each of those had either a specific aftermarket or servicing repair order of a decent have a decent size. And we have good visibility to the LTSA., the framework agreement on as well as multiple service and repair of the ex that that customers are looking to do it in 2025.
So we feel confident in our RSL growth outlook, both for the order and the sales book is important that we don't get behind in the year, I think is very is a key metric for us. We look at internally is that where we're seeing consistency in the aftermarket globally, and that is true so far to date, Q. one quarter to date, we don't want to get behind where we're sitting here in September saying you need to get a large service and repair or in order to hit that to hit that high single digit to 10%.
But the visibility that we have to the pipeline is strong around ourself. And then what will we also launched new fleet, take advantage of things that are within our own control on the RSL side. And those are multiple different and act activities that are going.
The aftermarket team and our regions working with them on are working on that specific product line targeting in Europe, North Africa, around piston compressors, penetration for the aftermarket on the centrifugal compressors coverage globally is an area that you will. And then chart legacy coverage.
We also are seeing more opportunities to have service agreement with the operators have larger plants were that's something that ties hand-in-hand to IPSMR in particular, where the EPCE. once the first gas or first liquid has achieved the EPC. Typically that is done with it, Roger, with the operator technology is a is a way for us to further penetrate service agreements on the in the digital uptime.
We're seeing great traction on taking that across specific products, and we're about to introduce that into our into the heat exchanger offering as well. So there's just a few examples of kind of within our own control to make sure that we're not relying on market dynamics to achieve that on that growth that we have laid out for 25 and ourselves.

Scott Gruber

So that's good color. And I want to come back to the IPO. Similar technologies gaining good traction. I believe that the payment structure and most of the contracts so far is an upfront licensing fee, but was greater adoption and global MSAs. Like the one you have with Exxon, what would you consider transition towards more of an ongoing fee structure for the technology update?
What we what we currently have done it, as you described, there is a technology fee associated with the utilization of IPSMR, but we are flexible working with our customers around what that what that could look like and how it's built into them into the contracts are key.

Jillian Evanko

Our key on any of these larger problem projects with or without IPSMR is that we do not go upside down on working capital. So that on those milestones are tied to on our are tied to our spend on material. And that or not, we're not behind the ball on that. And that's been a key focus.
So the overarching that's the first quarter and then on we work with individual customers on kind of what that technology see, how that's embedded. We'll go with their particular project. We're adverse to it. It's just dumb customer-specific. So the pressure, which Jonathan, but I think that.

Scott Gruber

Thank you.

Operator

Manav Gupta, UBS.

Manav Gupta

Good morning, one complete because of the data center market. As we look a whole lot of discussions progressing with the data center providers and some of the deep seek announcement. Any change any of those discussions? If you could just talk about that.

Jillian Evanko

Good morning. Mark. Would data centers as a whole? Maybe maybe I'll just step back to the increasing need for global energy is, is the theme, and that's that's inclusive of data centers. And our discussions amongst multiple different hyperscalers is consistent would be my would be my one.
What I would use if you had to FY. one word consistent in that they're going to be spending money in this area and CapEx, and they have a need for multiple different types of heat rejection associated with these data centers. And that the energy power demand is going to continue to increase as artificial intelligence becomes smarter and there's more of it out there.
So I think that deep seek or otherwise, there is not a change in direction of these folks looking for multiple different forms of power in multiple different ways to reject heat. And that's really what we're hearing from them.
We also because we're starting to see more demand in this market. We have recently hired a data center commercial team member, who will be joining our business development team here in the next week or so.
He brings a breadth of data center background and market knowledge and connection. So we would on we do see this as a meaningful opportunity ahead for us. I think my quick funnel is to use your free cash flow guidance for next year by 50 to $600 million.
And trying to understand what pushes towards the bulk of that guidance of EUR600 million. And similarly for EBITDA, trying to understand the blue sky scenario, which pushes you towards the top end versus the midpoint of the guide guidance.
Sure. I'm going to help of emission runoff. So the free cash flow forecast for this year is coming from stronger EBITDA conversion conversion from existing backlog.
We do have some we do have some normalizing of CapEx that I mentioned in my comments earlier. So just a combination of the two there in our overall growth is driving the free cash flow to the progress that we have.
And then eventually that so I'm sorry, your second part of my question there to the higher end of the EBITDA guidance, which would also be a contributor to the higher end of free cash flow guidance, you and speak to speak to that, Joe?

Joe Brinkman

Yes, just just the home, just as Joe described there as well as on a lower charge route and the good the backlog conversion backlog conversion and lower deal integration costs. And in mono, if there is a larger orders that come in early in the first half of the E really in the first half of 25, those would have the opportunity also to contribute on some revenue in the second half of two toward the higher end of the multiple different factors that go into achieving the higher end royalty. Is it off of an absolute growth rate perspective on the higher end would be year over year, lower than what we achieved in 20 for over 23 from the top line growth?

Manav Gupta

Thank you so much.

Operator

Marc Bianchi, TD Cowen.

Marc Bianchi

Could could you say what the out of out of 2024 orders? How much was LNG.? And how are you thinking about that number for 2025 on all, approximately that Mark, in terms of orders for LNGO. and I'm an approximately only because when you look at the kind of LNG. with in within HTS., sensible way larger and then you have LNG infrastructure and per vehicle tanks into the jump in specialty. And then there's some LNGRE., I guess that can show up in CTS. as well.

Jillian Evanko

I would estimate is approximately 20% to 25% range and of orders. And then we would anticipate that to be similar in 2025 compared to 2024.

Marc Bianchi

Okay. I think some folks anticipate an increase in 25 just given the change in the on the licensing for the U.S. and pump. Is it is that conservatism on your part or was it just, you know, some stuff going into the back half of 24 and that maybe makes it likely for growth? Maybe you could expand on that a little bit?

Jillian Evanko

Sure. I would say that it's a kind of down the fairway way to answer your questions and element of conservatism in that, given it's hard to predict on the larger pieces and parts, right? So to see consistent in the back half of 24, we mentioned meat anticipate Phase two coming in 25.
There's also a handful, as you mentioned, of other LNG projects globally now in the US that could move ahead. So there's opportunity for that to be larger and 25 compared to 24.
But that is not required for us to hit our 25 guidance that we put out there. So that's kind of how we're thinking of coming into the year. The construct around it really because there is variability of when these orders can can or may come in.
But with that said, our pipeline of LNG opportunities have grown in the last three months since we bought the vast. So pipeline of LNG. project opportunities, not only for equipment, but also for IPSMR potential has expanded. And that's definitely a direct result of our growing global demand for LNG.
The US administration bullishness on Alaska on Pennsylvania and US Gulf Coast, as well as projects that we're hearing are much closer to moving ahead than they maybe were even six months ago. We've got folks talking out there about products like like Abadi LNG with impacts like that in Tanzania.
And he is that Delfin, that's definitely more likely than it was even a year ago. So just to name a few on, I think I think the opportunity set has increased in the last few months, and we're really well positioned to play on many of them. It's just that hard to time. Some of the larger. Yes. Just makes sense from the other one I had was on this study to kind of cost saving that was happening.
Just first of all, to clarify, I think you said it was like what margins would have been 29% without that was that for fourth quarter was up for the full year selling the full year here? So Avoca, as we've looked at the cost around inefficiencies on specific costs related to we had we had a challenge with one particular third party supplier on the machine and getting that started up, which was a real challenge in the back half for us. So very specific cost that we do not anticipate repeating and what we call that went out.

Marc Bianchi

Mark was just because we wanted to clarify, if you're looking at modeling 25 in the segments where where kind of the 24, 25 jumping off points and was what were some of the contributors to the less than less than where we want Specialty Products gross margin to be?
Can you tell us exactly what I was asking? So we should sort of be solving for like this impact happening in to a true that 20, the clean market going towards like these issues are resolved now as we step into 25. Right?

Jillian Evanko

That's right.

Marc Bianchi

So any thought you thought about how the load and 24 very well, there was a little bit in Q2, but it really was Q3 and Q4.

Jillian Evanko

So I think you hit the nail on it.

Marc Bianchi

Great.

Jillian Evanko

Thanks so much.
Jolts OpEx.
Thank you, Mark.

Operator

Arun Jayaram, JPMorgan.

Arun Jayaram

You had a strong of a quarter of bookings, 1.5 billion, 5 billion of orders, about two thirds drain HGS, some specialty. I was just wondering if you could just comment on the quality of the bookings and maybe the margin implications for for Culp for HGS and specialty in particular.

Jillian Evanko

So it was a strong quarter on booking. It as a whole, obviously would buy Louisiana LNG. order being of meaningful magnitude, given given the utilization of IPSMR and the associated LNG equipment that will provide into that was a key contributor to us.
To add to that number, though, LNG and the projects in ACS, those bookings are above average gross margin generally. So the way to think about that is the strong Q4 bookings as a whole across the segments were an elevator to margin in backlog.
And then on the specialty side, very on a very broad mix. As we pointed out, though, I want to call out just maybe a couple of end markets and specialty that were strong performers in the fourth quarter on carbon capture.
And we've seen some really strong progress commercially in the market, in particular, on the use cases on. We've talked about a couple of those, whether that was the Bloom Energy Partnership or some of these other ones. But that's we're feeling we're seeing that on our carbon capture technology is now being used in larger Chart content applications and with the full solution mix come generally improving margin.
And then the other end market that I really would like to point out is space exploration and one point that went out because it had very strong that end market within specialty at a very strong Q4 in terms of all orders. But and even stronger start to 2025 with approximately $16 million of orders in the space exploration market in a combined January and February 2025.
And as you might imagine, in this space, type of end market is really low temperature, high pressure application that cannot fail. And we're talking about providing storage tanks as well as heat exchangers into these into these applications. So that's that's another key contributor to on two nice margin in backlog.

Arun Jayaram

Understood. It's clearly a mission critical applications on. Maybe just a follow up on just no, your outlook on orders. I think you highlighted around 2 billion of customer commitments that aren't yet quite in the backlog.
Can you just maybe describe the breadth and depth of those commitments? And thoughts on just backlog conversion into backlog for yet?

Jillian Evanko

The U.S. are absolutely on. So on that $2 billion pretty broad on. There's a couple of larger LNG projects in their need to have the ExxonMobil Mozambique resume a in that mix.
So that's not in backlog, but that's included in that $2 billion of commitments and years. A couple of other in there that would be LNG related. And so the timing of those aren't easily predictable, but you've heard what the larger operators have said around their timing associated with SID. So I would anticipate about, let's say, half of that 2 billion is related to LNG end markets.
And then you have on a handful of carbon capture applications that hadn't been booked because they would be dependent on government grant funding into the timing of that will be related to when they get their funding into that will likely be around clarity on plan funding for from certain states or in one case Canada, that's a small dollars, but I thought worth calling out because of the end market itself.
And then you have a couple of hydrogen related projects that are on international projects and have have site have permits and our and have offtake and are very close on on their financing with respect to financing that those would be we'd anticipate in 2025. So that's probably $150 million or so associated with those guys.
And then the last on is around a particular helium project outside of North America. And that project we have we have the award and waiting for their or their final go on their full financing. It's a very large project on a few that $300 million for that particular project. And we'd anticipate that that that one either will move forward and 25 or just won't move forward.

Arun Jayaram

Great. Thanks for the color. Interest.

Operator

Eric Stine, Craig-Hallum.

Eric Stine

So just sticking with the customer commitments that you just detail them, is it fair to say as you kind of rattle those off, it doesn't sound like that is very exposed to any of the issues that are uncertainty at the federal level US federal level. So I guess that would be first.
And then second, when we think about that number, is there any way to kind of compare that to what you've seen in the past? I mean, that's obviously seems like a pretty elevated number. But just looking for some context how to compare that to other periods?

Joe Brinkman

Yes. Thanks, Eric, for the question. You're absolutely right. The first part, which is that there's really very limited exposure to the decision making on at the federal US government level on or really at any government level, I should say across across the world on these, most of them really are in the case of Exxon taking FID on the project.
In the case of the larger helium, one is getting their their final full funding over the fence. So those that's a positive, I guess, in my mind, just given the changing dynamic in landscape with the people looking for certainty from the U.S. government, that's not the driver of these in the second part compared to the past.
That's a really interesting question. It was I was thinking about it in the last couple of weeks. What I think we said, gosh, I can't remember when we said is currently 1.5 billion or so maybe nine months ago. And then you wait at one point in the last six or eight months on that list was Woodside Phase one.
So even with booking Woodside Phase one, we've seen that funnel increase or at least stay flat. And that is that for me and my commitment funnel and we into that company is on a they're kind of tidbit of information around how we're viewing the demand profile of this coming 12 months.

Eric Stine

Okay. Very helpful, um, and then maybe just on orders. I mean, you obviously Kobo Woodside and there's a broad base. So I'm just curious, I mean, do you attribute any of the shrinks to it to a year end push on the part of your customers?
Or is this a true indication of the strength of the overall business? And then is it fair to assume 2025 While there can be quarter-to-quarter variability, book-to-bill above one?

Joe Brinkman

Yes, the book-to-bill above one and 25, we absolutely stick the words right out of my mouth on. I wouldn't I would say that we anticipate that Q1 book-to-bill will be one or both.

Eric Stine

Okay. Thank you.

Joe Brinkman

Thanks, Eric.

Operator

Robert Brown, Lake Street Capital Markets.

Robert Brown

Third jobs. I just wanted to dig in a little bit under gross margin expansion from discussion. Where where do you sort of see that getting to know because over time we're committed to the left and where that could be?

Jillian Evanko

Yes. Just as I mentioned in my comments, mid mid 30s gross margin still is arbitrary target. Nothing changing on that. I think over time, that's a that's a journey from would be the way we would describe it on that. We anticipate to get beyond the mid 30s, right, that that's really truly a medium term.
And when we laid the medium term out, that was for 2026. And I think we're in early innings of on our business excellence activities as well. Yes.
So as we continue to deliver center to, as Joe mentioned, in the mid 30s or medium term target and will continue to expand on that more favorable favorable product mix across our U.S. So and specialty and on the specific business for booking United States just will continue to drive those margins up over time.

Robert Brown

Okay, great. We talked about the oh two on industrial gas meter. On how much how much penetration is there to go in and kind of that such customer base around the world sort of visibility there?

Jillian Evanko

So AMI on with the majors, those we've typically had over the years and when they when they come up for renewal, we worked really hard with with the in conjunction with them and partner with them on what their needs are and what the challenges both sides faced in the last go around.
And so how do we how do we optimize that for win-wins? So on the on the major side, I think there's more opportunity to penetrate other products within those LTAs. And that's an area that we have. We're working with them on as well as penetrating more on the aftermarket service repair aspects of those agreements are in terms of kind of other industrial gas folks unit is the way we tend to speak to the majors, but there's also So multiple different others on that play in industrial gas.
From the independent perspective, we home independent to these would be the nonindustrial gas majors folks that are more localized, regionalized industrial gas. And we see a meaningful opportunity to to work more closely with them. And we have been over the last year. So we've been working to develop those partnerships to move them to to LTA. in particular. And that is primarily a North American and European continent.
We I think there's one or two real strong potentials in Europe or this in 2025 and a handful in the United States that we could get done in the next 18 months or so. So there's there's more opportunity for us, but would be more of them at lower volumes just because of the size of their businesses.

Robert Brown

Thank you.

Jillian Evanko

Thank you, Rob.

Operator

Question, and I'm Sharon Malka, Ravi from BYIG.

First, the addition of Asia Oriental Hong versus this moratorium Saga for U.S. LNG projects. And you talked about growing funnel if all these projects have been paused, the starting line, so to speak and looking at FID. around the same time, good long lead equipment for these projects become sort of a bottleneck.
And just to ask you to answer, I guess, between that and tariffs, would you say pricing? Is it becoming a more flexible or should we still think about $30 million per MMTDA. for IPSMR?

Joe Brinkman

So So it depends on the project in terms of the dollar per on per MTPA., but it just yet whether they have hydrocarbon renewables or a various content. But I think directionally, you directionally used an estimate of what we've said historically, per and TPS and definitely growing, as you mentioned, growing utilization of IPSMR and on, there's there's brownfield opportunities from existing operators and then there's greenfield opportunities.
I think the brownfield opportunities look similar to what they look like even during the L&G moratorium, whereas Greenfield opportunities are the ones that have expanded in the ones that maybe prior thought of themselves as we're not going to move forward. And now there is demand for it. And so there's an opportunity for us to move forward.
So all that said, we feel good about the fact that we expanded our capacity over the course of the last seven years to be able to serve not only the LNG market but the heat, it's all things, energy, all things molecules in the heart and soul of that is around the heat exchanger capacity and the tank capacity and as well as fans.
So those three have been a key area of focus for us to ensure that we have the capacity and the size of the furnaces that are needed to be able to deliver these customers' needs. And so I think we're really well-positioned. Capacity-wise pipeline is growing, and we'll just see how these how the project timing and which ones going forward as the year and the years the next three years go on.

That's very helpful. Thanks, Joe.

Joe Brinkman

Thanks, Ralph.

Operator

Doug Becker, Capital One.

Doug Becker

Joe, you had another strong quarter two quarters, including some large orders or some ongoing throughput initiatives. Just how much of your backlog you now expect to convert to revenue this year? And just any context you can provide around how much of Year End 23 backlog was converted last year?

Joe Brinkman

Yes. So we would expect approximately 60% of year end 24 backlog to convert in 2025. And it's I don't have the answer to the second part of your question on 23. But definitely, could we could go back and provide that to. I would probably estimate in the 5% to 60%, but I'm not I would need to check that figure to be to be specifically accurate on that.

Doug Becker

No, that's fair. And the higher conversion, is that a function of throughput initiatives or is it just the type of projects in the backlog?

Joe Brinkman

The throughput initiatives are key to that. And also in particular shops, I should say, like the compressor shops as an example, to screw compressor shops in Europe. I mean there was some bottleneck challenges there.
We're getting more and more throughput in the heat exchanger shops, in particular, the cold box shops. So those would be the three that really can drive improved backlog conversion.
With the efforts that we've done so far, we still have more to do on on throughput, improved payments in 25 and the teams are really working hard on that, but that that contributor definite contributor to this.
And then you. And then there's also something like the large LNG projects, like the wood side, where we had pretty good visibility on the timing of that revenue and the associated engineering associated on milestones with that particular project.
As an example, that's kind of combo of both. But I really want to see the self-help throughput start to flow through on for growth through the top line here in 2025.

Doug Becker

Got it. And then just another one on trying to get more comfortable with the CTS. outlook. Like the backlog was down 20% last year and from the outside looking in that seems like a very high hurdle to get over the LPA with the industrial gas majors that in isolation enough to support growth in she just this year or do you need some of those smaller independents to come in to actually show growth this year?

Joe Brinkman

We did not revise our forecast does not rely on the small independents to come in, but it's not that one in particular LTA, either that is the driver of the growth is kind of a broad-based global look at where the where the industrial gas guys are spending their money.
And then the other part, the answer, Doug, is just to there, there's a handful of on these projects that were a bit larger and 23 that we have visibility to similarly sized ones for 25 with two of those being anticipated to come in on the first half of 25 as well.
So I think the LTAs nice contributor to it. But also just the general kind of demand profile globally is a key contributor to our outlook. Also the first couple of months start to the year. I'm informed our thought process around it as well.
Yes, I would just a lot of news on the industrial gas. There are ebbs and flows to their CapEx cycles on with some willingness to their to their ordering practices. So that could contribute on a quarter-over-quarter basis.

Doug Becker

Got it. Thank you.

Joe Brinkman

Thanks, Doug.

Operator

Ati Modak, Goldman Sachs.

Ati Modak

Harsh question. I was not good for us an update on how you're seeing hydrogen and especially in that time period from the 45 favorable Charlie January. How are you seeing that 7% to 10% growth through 2030 that you highlighted during the Capital Markets Day?

Jillian Evanko

Yes, thanks for the question on. So I think the hydrogen market at times get pigeonholed into being a US discussion. And for us, it is a much more global discussion. We've seen, as I mentioned in his script, we saw a strong year in Europe, in particular on the hydrogen side.
So for us was storage tanks in comparison to those were kind of the two primary products that went into on to those applications. And we're seeing continued continued demand in hydrogen from mostly the liquefaction side globally as well.
In terms of the 45 V and some clarifications that came out. What I'd say to that is the market in the operators that will that we're waiting, they really need the IRA was to ensure clarity until the 45 the clarification came out in the last couple of months. And so there is really 2.5 years years of these guys waiting for those clarification.
I almost view it as a catalyst in a positive way to on to move folks who can't do it out of the way. And those who really are on you have a real projects here in real funding here and can utilize the structure as it's been laid out a positively as being for the United States in the industry.
And I do think from a global perspective that on that high single digits to 10% for the key here between now and 2030 is is very achievable for the market and in for our company to play in that both gases and liquid end market.

Ati Modak

Thanks, Nicole. And I'll turn it back. Thank you.

Operator

Thinking that answer your question and answer session. I will now hand the call back to Mr. Jonathan Cohen for any closing remarks.

Thank you, Anna, and thank you, everyone, for joining us this morning. We look forward to the coming months to provide further updates. Have a great rest of the day. I think.

Operator

And this concludes today's call. Thank you for participating. You may all disconnect.