Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the
first quarter ended March 31, 2024.
For the quarter ended March 31, 2024, Hudson
reported revenues of $65.3 million, a decrease of 15% compared to
revenues of $77.2 million in the comparable 2023 period. The
decrease is primarily related to decreased selling prices for
certain refrigerants as well as lower revenue from the Company’s
DLA contract in the quarter compared to the first quarter of 2023.
Gross margin in the first quarter of 2024 was 33%, compared to 39%
in the first quarter of 2023. Hudson reported operating income of
$12.8 million in the first quarter of 2024, compared to operating
income of $22.7 million in the prior year period. The Company
recorded net income of $9.6 million or $0.21 per basic and $0.20
per diluted share in the first quarter of 2024, compared to net
income of $15.5 million or $0.34 per basic and $0.33 per diluted
share in the same period of 2023.
Brian F. Coleman, President and Chief Executive
Officer of Hudson Technologies commented, “Our 2024 selling
season has kicked off largely as we expected, with our first
quarter revenues reflecting a difficult comparison to the first
quarter of 2023, which reflected higher sale prices for certain
refrigerants as well as higher volume from our DLA contract. During
the first quarter of 2024, the industry saw pricing for certain
refrigerants decline by approximately 20% as compared to pricing
levels in the first quarter of 2023.
“In the event that current pricing levels
continue for the balance of the 2024 selling season, we would
anticipate full year revenue in the range of $250 to $265 million,
with gross margin below our targeted 35%. Given the ongoing
stepdown in virgin HFC production, as supply tightens, we would
expect to see an increase in the sales price for certain
refrigerants and the achievement of our long-range gross margin
target of 35%, but the timing is difficult to predict. In the
meantime, the current lower pricing dynamic provides us the
opportunity to replenish our inventory with lower cost refrigerants
as we move through the 2024 cooling season. To the extent that the
current pricing dynamic that we have seen in the first quarter of
2024 continues through the sales season, then we would not expect
to meet our previously stated 2025 revenue and gross margin
targets.”
Mr. Coleman concluded, “As we have often
mentioned, our selling season comprises nine months, and we believe
the 2024 season will provide us with enhanced visibility around the
ongoing HFC phasedown and corresponding supply/demand dynamics as
we navigate the 40% stepdown in virgin HFC production and
consumption. Additionally, the EPA’s proposed Refrigerant
Management rule is expected to be finalized in late summer and
includes proposed language mandating the use of reclaimed
refrigerants for certain applications and equipment.
While 2024 may not unfold as favorably as previously expected, it
is important to reiterate our confidence that the phasedown of HFC
will ultimately move pricing higher, accelerate reclamation
adoption and drive enhanced profitability in our business. With our
industry leading reclamation technology and established customer
network, we believe Hudson is well positioned to benefit from the
continued implementation of the AIM Act as virgin HFC refrigerant
production and consumption is reduced and the industry begins to
rely more meaningfully on reclaimed refrigerants to service the
existing installed base of cooling and refrigeration
equipment.”
Conference Call Information
The Company will host a conference call and
webcast to discuss the first quarter results today, May 1, 2024 at
5:00 P.M. Eastern Time.
To access the live webcast, log onto the Hudson
Technologies website at www.hudsontech.com, and click on
“Events”.
To participate in the call by phone, dial (888)
506-0062 approximately five minutes prior to the scheduled start
time. International callers please dial (973) 528-0011. Callers
should use entry code: 758914.
A replay of the teleconference will be available
until May 31, 2024 and may be accessed by dialing (877) 481-4010.
International callers may dial (919) 882-2331. Callers should use
conference ID: 50388.
About Hudson Technologies
Hudson Technologies, Inc. is a leading provider
of innovative and sustainable refrigerant products and services to
the Heating Ventilation Air Conditioning and Refrigeration
industry. For nearly three decades, we have demonstrated our
commitment to our customers and the environment by becoming one of
the first in the United States and largest refrigerant reclaimers
through multimillion dollar investments in the plants and advanced
separation technology required to recover a wide variety of
refrigerants and restoring them to Air-Conditioning, Heating, and
Refrigeration Institute standard for reuse as certified EMERALD
Refrigerants™. The Company's products and services are
primarily used in commercial air conditioning, industrial
processing and refrigeration systems, and include refrigerant and
industrial gas sales, refrigerant management services consisting
primarily of reclamation of refrigerants and RefrigerantSide®
Services performed at a customer's site, consisting of system
decontamination to remove moisture, oils and other contaminants.
The Company’s SmartEnergy OPS® service is a web-based real time
continuous monitoring service applicable to a facility’s
refrigeration systems and other energy systems. The Company’s
Chiller Chemistry® and Chill Smart® services are also predictive
and diagnostic service offerings. As a component of the Company’s
products and services, the Company also generates carbon offset
projects.
Safe Harbor Statement under the Private Securities
Litigation Reform Act of 1995
Statements contained herein which are not
historical facts constitute forward-looking statements. Such
forward-looking statements involve a number of known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, but are not limited to,
changes in the laws and regulations affecting the industry, changes
in the demand and price for refrigerants (including unfavorable
market conditions adversely affecting the demand for, and the price
of, refrigerants), the Company's ability to source refrigerants,
regulatory and economic factors, seasonality, competition,
litigation, the nature of supplier or customer arrangements that
become available to the Company in the future, adverse weather
conditions, possible technological obsolescence of existing
products and services, possible reduction in the carrying value of
long-lived assets, estimates of the useful life of its assets,
potential environmental liability, customer concentration, the
ability to obtain financing, the ability to meet financial
covenants under its existing credit facility, any delays or
interruptions in bringing products and services to market, the
timely availability of any requisite permits and authorizations
from governmental entities and third parties as well as factors
relating to doing business outside the United States, including
changes in the laws, regulations, policies, and political,
financial and economic conditions, including inflation, interest
and currency exchange rates, of countries in which the Company may
seek to conduct business, the Company’s ability to successfully
integrate any assets it acquires from third parties into its
operations, and other risks detailed in the Company's 10-K for the
year ended December 31, 2023 and other subsequent filings with the
Securities and Exchange Commission. The words "believe",
"expect", "anticipate", "may", "plan", "should" and similar
expressions identify forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date the statement was
made.
| Investor Relations
Contact:John Nesbett/Jennifer BelodeauIMS Investor
Relations (203) 972-9200jnesbett@institutionalms.com |
Company
Contact:Brian F. Coleman, President & CEOHudson
Technologies, Inc.(845) 735-6000bcoleman@hudsontech.com |
|
|
|
Hudson Technologies, Inc. and
SubsidiariesConsolidated Balance
Sheets(Amounts in thousands, except for share and par
value amounts) |
|
|
| |
|
March 31, |
|
December 31, |
| |
|
2024 |
|
2023 |
| |
|
(unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
10,551 |
|
$ |
12,446 |
|
Trade accounts receivable – net |
|
|
35,936 |
|
|
25,169 |
|
Inventories |
|
|
147,759 |
|
|
154,450 |
|
Income tax receivable |
|
|
1,687 |
|
|
5,438 |
|
Prepaid expenses and other current assets |
|
|
7,551 |
|
|
7,492 |
|
Total current assets |
|
|
203,484 |
|
|
204,995 |
| |
|
|
|
|
|
|
|
Property, plant and equipment, less accumulated depreciation |
|
|
19,467 |
|
|
19,375 |
|
Goodwill |
|
|
47,803 |
|
|
47,803 |
|
Intangible assets, less accumulated amortization |
|
|
14,072 |
|
|
14,771 |
|
Right of use asset |
|
|
6,176 |
|
|
6,591 |
|
Other assets |
|
|
3,161 |
|
|
3,137 |
|
Total Assets |
|
$ |
294,163 |
|
$ |
296,672 |
| |
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
13,741 |
|
$ |
23,399 |
|
Accrued expenses and other current liabilities |
|
|
31,428 |
|
|
31,537 |
|
Accrued payroll |
|
|
2,189 |
|
|
3,615 |
|
Total current liabilities |
|
|
47,358 |
|
|
58,551 |
|
Deferred tax liability |
|
|
3,705 |
|
|
4,558 |
|
Long-term lease liabilities |
|
|
4,489 |
|
|
4,790 |
|
Total Liabilities |
|
|
55,552 |
|
|
67,899 |
| |
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
Preferred stock, shares authorized 5,000,000: Series A Convertible
preferred stock, $0.01 par value ($100 liquidation preference
value); shares authorized 150,000; none issued or outstanding |
|
|
— |
|
|
— |
|
Common stock, $0.01 par value; shares authorized 100,000,000;
issued and outstanding: 45,510,925 and 45,502,380,
respectively |
|
|
455 |
|
|
455 |
|
Additional paid-in capital |
|
|
118,367 |
|
|
118,091 |
|
Retained earnings |
|
|
119,789 |
|
|
110,227 |
|
Total Stockholders’ Equity |
|
|
238,611 |
|
|
228,773 |
| |
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity |
|
$ |
294,163 |
|
$ |
296,672 |
|
|
|
Hudson Technologies, Inc. and
SubsidiariesConsolidated Statements of
Income(unaudited)(Amounts in thousands,
except for share and per share amounts) |
|
|
| |
|
Three-months period |
| |
|
ended March 31, |
| |
|
2024 |
|
|
2023 |
|
|
Revenues |
|
$ |
65,250 |
|
|
$ |
77,199 |
|
| Cost of
sales |
|
|
43,829 |
|
|
|
46,869 |
|
| Gross
profit |
|
|
21,421 |
|
|
|
30,330 |
|
| |
|
|
|
|
|
|
| Operating
expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
7,947 |
|
|
|
6,977 |
|
|
Amortization |
|
|
698 |
|
|
|
698 |
|
|
Total operating expenses |
|
|
8,645 |
|
|
|
7,675 |
|
| |
|
|
|
|
|
|
| Operating
income |
|
|
12,776 |
|
|
|
22,655 |
|
| |
|
|
|
|
|
|
| Interest
expense |
|
|
(214 |
) |
|
|
(1,849 |
) |
| |
|
|
|
|
|
|
| Income before income
taxes |
|
|
12,562 |
|
|
|
20,806 |
|
| |
|
|
|
|
|
|
| Income tax
expense |
|
|
3,000 |
|
|
|
5,275 |
|
| |
|
|
|
|
|
|
| Net
income |
|
$ |
9,562 |
|
|
$ |
15,531 |
|
| |
|
|
|
|
|
|
| Net income per common share –
Basic |
|
$ |
0.21 |
|
|
$ |
0.34 |
|
| Net income per common share –
Diluted |
|
$ |
0.20 |
|
|
$ |
0.33 |
|
| Weighted average number of
shares outstanding – Basic |
|
|
45,509,423 |
|
|
|
45,298,514 |
|
| Weighted average number of
shares outstanding – Diluted |
|
|
47,468,520 |
|
|
|
47,311,027 |
|
|
|
|
Hudson Technologies, Inc. and
SubsidiariesConsolidated Statements of Cash
Flows(unaudited)(Amounts in
thousands) |
|
|
| |
|
Three-months period |
| |
|
ended March 31, |
| |
|
2024 |
|
|
2023 |
|
| Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net income |
|
$ |
9,562 |
|
|
$ |
15,531 |
|
| Adjustments to reconcile net
income to cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
Depreciation |
|
|
744 |
|
|
|
751 |
|
|
Amortization of intangible assets |
|
|
698 |
|
|
|
698 |
|
|
Amortization of lease right of use asset, net |
|
|
(1 |
) |
|
|
1 |
|
|
Lower of cost or net realizable value inventory adjustment |
|
|
397 |
|
|
|
322 |
|
|
Allowance for doubtful accounts |
|
|
163 |
|
|
|
509 |
|
|
Share based compensation |
|
|
279 |
|
|
|
1,057 |
|
|
Amortization of deferred finance costs |
|
|
57 |
|
|
|
268 |
|
|
Deferred tax expense |
|
|
(853 |
) |
|
|
1,357 |
|
| Changes in assets and
liabilities: |
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
(10,930 |
) |
|
|
(18,401 |
) |
|
Inventories |
|
|
6,294 |
|
|
|
8,047 |
|
|
Prepaid and other assets |
|
|
(140 |
) |
|
|
(1,493 |
) |
|
Income taxes receivable |
|
|
3,751 |
|
|
|
3,777 |
|
|
Accounts payable and accrued expenses |
|
|
(10,954 |
) |
|
|
(1,758 |
) |
|
Cash (used in) provided by operating
activities |
|
|
(933 |
) |
|
|
10,666 |
|
| |
|
|
|
|
|
|
| Cash flows from
investing activities: |
|
|
|
|
|
|
| Additions to property, plant,
and equipment |
|
|
(960 |
) |
|
|
(412 |
) |
|
Cash used in investing activities |
|
|
(960 |
) |
|
|
(412 |
) |
| |
|
|
|
|
|
|
| Cash flows from
financing activities: |
|
|
|
|
|
|
| Proceeds from issuance of
common stock |
|
|
1 |
|
|
|
38 |
|
| Excess tax benefits from
exercise of stock options |
|
|
(3 |
) |
|
|
(2 |
) |
| Repayment of long-term
debt |
|
|
— |
|
|
|
(3,263 |
) |
|
Cash used in financing activities |
|
|
(2 |
) |
|
|
(3,227 |
) |
| |
|
|
|
|
|
|
| Increase (decrease) in cash
and cash equivalents |
|
|
(1,895 |
) |
|
|
7,027 |
|
| Cash and cash equivalents at
beginning of period |
|
|
12,446 |
|
|
|
5,295 |
|
|
Cash and cash equivalents at end of period |
|
$ |
10,551 |
|
|
$ |
12,322 |
|
| |
|
|
|
|
|
|
| Supplemental
disclosure of cash flow information: |
|
|
|
|
|
|
| Cash paid for interest |
|
$ |
105 |
|
|
$ |
1,369 |
|
| |
|
|
|
|
|
|
| Cash paid for income taxes –
net |
|
$ |
102 |
|
|
$ |
142 |
|
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