Chart Industries' recent Q1 2024 earnings call (NYSE:GTLS) was a symphony of record-breaking numbers. Orders, backlog, sales, margins – everything was up and to the right. Analysts, understandably, focused on the robust demand across Chart's diverse portfolio, the impressive synergy capture from the Howden acquisition, and the continued margin expansion. But something else caught my eye, something less obvious, something potentially explosive: the hints of a burgeoning billion-dollar market that Chart is uniquely positioned to dominate.

The company has been vocal about its role in the clean energy transition, focusing on solutions for LNG, hydrogen, and carbon capture. These markets are exciting, no doubt, but their timelines remain somewhat uncertain. However, nestled within the transcript are subtle references to a less-hyped sector that appears to be moving at a breakneck pace: sustainable heavy-duty transport.

While discussions around hydrogen-powered trucks and cars have dominated headlines, a quieter revolution is brewing in larger applications – ships, trains, and even aerospace exploration. The Biden Administration recently announced $6 billion in funding for demonstration projects to reduce emissions in heavy industrial applications, and the private sector is pouring resources into studying and developing low-emission solutions for these heavy-duty sectors.

And Chart Industries, with its newly opened Teddy2 facility in Alabama, is poised to ride this wave. This state-of-the-art manufacturing plant is specifically designed to produce the jumbo-sized cryogenic tanks needed to store and transport liquid hydrogen for these large-scale applications.

Here's where the billion-dollar opportunity comes in: Chart's commercial pipeline for marine LNG, space exploration, and rail projects for the Teddy2 facility alone is already over $400 million. But the truly astonishing detail is that since opening the facility just a month ago, this pipeline has grown by a whopping 20%, adding an incremental $80 million in potential opportunities.

Now, let's extrapolate. If this level of growth continues, and there's every reason to believe it will given the government and private sector commitments to decarbonizing heavy-duty transport, Chart could easily be looking at a billion-dollar pipeline for Teddy2 in the near future.

The transcript provides further validation. Chart announced a new partnership with Energy Observer to develop the Energy Observer 2, a liquid hydrogen cargo ship. They've also signed a memorandum of understanding (MOU) with GasLog LNG Services to study the development of a commercial-scale liquid hydrogen supply chain for maritime transport.

These announcements underscore the growing demand for Chart's solutions in this emerging market. While other companies are still exploring the possibilities, Chart is already executing agreements and building relationships with key players in the sustainable heavy-duty transport space.

This brings me to my hypothesis: Chart Industries is quietly positioning itself to become the dominant player in a nascent billion-dollar market for liquid hydrogen solutions in heavy-duty transport.

Let's do some back-of-the-envelope calculations. Assuming Chart captures a conservative 50% of its existing $480 million Teddy2 pipeline, that's $240 million in revenue. If this pipeline grows to $1 billion, as the recent trend suggests, that's a potential $500 million in revenue for Chart. And considering the early stages of this market, this figure could easily double or even triple in the coming years.

The implications for Chart are enormous. Not only would capturing this market significantly boost the company's top line, but the high-margin nature of these projects would also drive substantial profitability growth. Furthermore, the long-term nature of these contracts would provide Chart with predictable and sustainable revenue streams, further mitigating the company's historical cyclicality.

While analysts are busy dissecting the already impressive numbers, Chart Industries may be holding a billion-dollar secret in plain sight. The company's strategic investments and early mover advantage in the sustainable heavy-duty transport market could unlock significant value for investors in the coming years.

Emerging Market Growth for Chart Industries

The following chart is a hypothetical representation of Chart Industries's Teddy2 pipeline growth, emphasizing the growing importance of sustainable heavy-duty transport.

"Fun Fact: Did you know that Chart Industries' technology played a key role in the Apollo 11 mission, providing the cryogenic containers that stored the liquid oxygen and hydrogen fuel for the Saturn V rocket? From powering the journey to the moon to now fueling the transition to a cleaner future, Chart Industries has a long history of innovation and tackling audacious challenges."