WOODCLIFF LAKE, NJ – NOVEMBER 2, 2022 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the third quarter ended September 30, 2022.
For the quarter ended September 30, 2022, Hudson reported revenues of $89.5 million, an increase of 48% compared to revenues of $60.6 million in the comparable 2021 period. Third quarter revenue growth was driven by increased selling prices for certain refrigerants during the period. Gross margin in the third quarter of 2022 increased to 49%, compared to 39% in the third quarter of 2021, mainly due to the increase in selling price without a material appreciation in the cost basis of certain refrigerants sold. Hudson reported operating income of $36.3 million in the third quarter of 2022, compared to operating income of $16.9 million in the prior year period. The Company recorded net income of $29.4 million or $0.65 per basic and $0.62 per diluted share in the third quarter of 2022, compared to net income of $15.9 million or $0.36 per basic and $0.34 per diluted share in the same period of 2021. Net income during the third quarter of 2022 included an incremental non-cash tax benefit of $2.8 million associated with the release of an income tax valuation allowance as a result of increased profitability.
For the nine months ended September 30, 2022, Hudson reported revenues of $277.8 million, an increase of 79% compared to revenues of $155.0 million in the first nine months of 2021. Revenue growth was driven by an increase in selling prices for certain refrigerants during the period. Gross margin in the first nine months of 2022 increased to 53%, compared to 35% in the first nine months of 2021, mainly due to the increase in selling price without a material appreciation in the cost basis of certain refrigerants sold. Hudson reported operating income of $124.4 million in the first nine months of 2022, compared to operating income of $33.0 million in the prior year period. The Company recorded net income of $98.7 million or $2.20 per basic and $2.10 per diluted share in the first nine months of 2022, compared to net income of $26.1 million or $0.60 per basic and $0.56 per diluted share in the same period of 2021. Net income during the first nine months of 2022 included an incremental non-cash tax benefit of $14.4 million associated with the release of an income tax valuation allowance as a result of increased profitability.
Brian F. Coleman, President and Chief Executive Officer of Hudson Technologies commented,
“Our third quarter performance delivered a strong close to our 2022 selling season, as reflected in continued record revenues, improved margins and enhanced profitability. Throughout the selling season we benefited from sustained higher pricing of certain refrigerants, as well as our strategic positioning in the supply chain for refrigerants. Our enhanced profitability and strong free cash flow in 2022 have allowed us to reduce total debt, including approximately $31 million paid down in the third quarter, strengthening our balance sheet and improving our financial flexibility as we move through the close of this year and into 2023.
“As we expected, gross margin in the third quarter, while significantly improved compared to the third quarter of last year, has begun to show sequential moderation as compared to gross margins in the first and second quarters of 2022, as the gap between inventory cost and sales price has begun to narrow.
“Hudson enjoyed a very successful 2022 selling season and, with the ongoing stepdown in HFC production and consumption allowances mandated by the AIM Act, we remain confident that we are well positioned to meet our longer-term targets. With a 10% stepdown mandated for 2022 and 2023 and a 40% baseline reduction in virgin production starting 2024, we expect this phasedown to provide an inflection point for our business as the industry begins to rely on reclaimed refrigerant to meet its HFC needs. With our industry-leading reclamation technology, and longstanding and growing customer base who are aligned with our commitment to refrigerant management and enhanced reclamation strategies, we’re uniquely positioned to fill the anticipated HFC supply gap as virgin production is phased down. We remain intent in our mission to enable the broad transition to next generation refrigerants and more efficient equipment by ensuring that the refrigerants needed for the existing installed base remain available and easily accessible,” Mr. Coleman concluded.
