PEARL RIVER, NY – DECEMBER 5, 2018 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the third quarter and nine months ended September 30, 2018.
For the quarter ended September 30, 2018 Hudson reported revenues of $40.5 million, an increase of 64% compared to $24.7 million in the comparable 2017 period. Revenues for the 2018 period included revenues from Aspen Refrigerants, Inc. (“ARI”) which was acquired in October 2017. Excluding the impact of ARI, revenues for the quarter ended September 30, 2018 decreased by $5.8 million from the comparable quarter in 2017. This decline was attributable to a decrease in the selling price per pound of certain refrigerants sold, which accounted for a decrease in revenues of $2.3 million and a decrease in the number of pounds of certain refrigerants sold, which accounted for a decrease in revenues of $3.5 million. The Company recorded a net loss of $13.9 million or ($0.33) per basic and diluted share in the third quarter of 2018, as compared to net income of $2.1 million or $0.05 per basic and diluted share in the same period of 2017. Included in the $13.9 million third quarter 2018 loss are approximately $9 million in non-cash charges related to a deferred tax reserve and approximately $2 million in non-recurring charges related to the acquisition and integration of ARI. Non-GAAP adjusted net loss for the quarter ended September 30, 2018 was ($0.5) million, or ($0.01) per diluted share, compared to non-GAAP adjusted net income of $3.8 million, or $0.09 per diluted share during the third quarter of 2017. Adjusted EBITDA was $5.0 million for the third quarter of 2018, as compared to adjusted EBITDA of $3.0 million for the third quarter of 2017.
For the nine months ended September 30, 2018, Hudson reported revenues of $140.8 million, an increase of 22% compared to $115.8 million in the comparable 2017 period. Revenues for the 2018 period included revenues from ARI. Excluding the impact of ARI, revenues for the first nine months of 2018 decreased by $44 million from the comparable 2017 period. The decline was attributable to a decrease in the selling price per pound of certain refrigerants sold, which accounted for a decrease in revenues of $29 million and a decrease in the number of pounds of certain refrigerants sold, which accounted for a decrease in revenues of $15 million. The Company experienced negative gross margins for the first nine months of 2018 compared to gross margin of 30% in the first nine months of 2017. The Company’s net loss for the first nine months of 2018 was $47.6 million, or ($1.12) per basic and diluted share, which included a non-cash inventory write down of approximately $35 million, an approximately $9 million non-cash tax effect for reserve allowance, and approximately $6 million in non-recurring charges related to the acquisition and integration of ARI, as compared to net income of $16.4 million or $0.39 per basic and $0.38 per diluted share in the first nine months of 2017. Non-GAAP adjusted net loss for the nine months ended September 30, 2018, which excludes any inventory write downs, was ($1.1) million, or ($0.03) per diluted share, compared to non-GAAP adjusted net income of $18.2 million, or $0.42 per diluted share during the first nine months of 2017. Adjusted EBITDA was $12.6 million for the first nine months of 2018, as compared to adjusted EBITDA of $28.9 million for the first nine months of 2017.
Reconciliations of net income (loss) to non-GAAP adjusted net income (loss), diluted net income (loss) per share to non-GAAP adjusted diluted net income (loss) per share, and net income (loss) to non-GAAP adjusted EBITDA, respectively, are provided in the tables immediately following the consolidated statement of operations. Additional information about the Company’s non-GAAP financial measures can be found under the caption “Use of Non-GAAP Measures” below.
Following the close of the quarter, Hudson announced that it has entered into definitive amendments to its term loan and revolving loan credit facilities. These amendments have been implemented pursuant to a Waiver and Third Amendment to its Term Loan Credit and Security Agreement (the “Third Amendment”), as well as a Second Amendment to its Amended and Restated Revolving Credit and Security Agreement (the “Second Revolver Amendment”). Additionally, on November 30, 2018 the Company filed its Form 10-Q for the period ended June 30, 2018, together with its Form 10-Q for the period ended September 30, 2018. With those filings, the Company has regained compliance with the periodic filing requirement of the Nasdaq Stock Market.
Kevin J. Zugibe, Chairman and Chief Executive Officer of Hudson Technologies commented, “We were pleased to announce definitive amendments to our credit facilities, which we believe provide us with the financial flexibility and liquidity to drive improved operating performance moving forward. Despite a selling season characterized by just-in-time buying patterns, diminished pricing of most refrigerants and seasonably cooler temperatures, we achieved $35 million in cash flow from operations during the first nine months of 2018, compared to $12.1 million for the comparable period in 2017. Additionally, we’ve reduced our debt by $37 million year-to-date and had approximately $45 million of availability as of September 30, 2018.
“The 2018 selling season was one of the most challenging for the industry and our company. The severe price corrections across nearly all refrigerants were unprecedented. That said, with our visibility today, we believe that pricing has stabilized and our margins should improve as we replace the higher priced inventory with lower priced product. Likewise, operationally we are better prepared to more effectively address just-in-time buying patterns, should that pattern continue in 2019.”
Mr. Zugibe concluded, “Our acquisition of ARI has enhanced our customer base and product offerings, giving us added flexibility to navigate the current refrigerant market. With our solid, longstanding customer base, more diverse product portfolio and expanded distribution network, we remain optimistic about the market opportunity ahead. As we move forward, we remain focused on strengthening our leadership position in the refrigerant and reclamation industry.”
Conference Call Information
The Company will host a conference call and webcast to discuss the third quarter results today, December 5, 2018 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 “Investor Relations”.
To participate in the call by phone, dial (877) 407-9205 approximately five minutes prior to the scheduled start time. International callers please dial (201) 689-8054.
A replay of the teleconference will be available until January 5, 2019 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 41503.
