Hudson Technologies Reports Fourth Quarter Revenue Growth of 26%; Record Full Year 2022 Revenue of $325.2. Million
WOODCLIFF LAKE, NJ – MARCH 8, 2023 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the fourth quarter and year ended December 31, 2022.
For the quarter ended December 31, 2022, Hudson reported revenues of $47.4 million, an increase of 26% compared to revenues of $37.8 million in the comparable 2021 period. Fourth quarter revenue growth was driven by increased selling prices for certain refrigerants during the period as well as increased sales volume in the quarter as compared to the fourth quarter of 2021. Gross margin in the fourth quarter of 2022 was 32%, compared to 45% in the fourth quarter of 2021. Hudson reported operating income of $7.1 million in the fourth quarter of 2022, compared to operating income of $9.3 million in the prior year period. The Company recorded net income of $5.1 million or $0.11 per basic and diluted share in the fourth quarter of 2022, compared to net income of $6.2 million or $0.14 per basic and $0.13 diluted share in the same period of 2021.
For the year ended December 31, 2022, Hudson reported revenues of $325.2 million, an increase of 69% compared to revenues of $192.7 million for full year 2021. The revenue growth was driven by increased selling prices for certain refrigerants during the period. Gross margin for full year 2022 was 50%, compared to gross margin of 37% in the prior year period. The margin increase is primarily related to higher selling prices for certain refrigerants for 2022 when compared to 2021. Hudson reported operating income of $131.5 million for full year 2022 compared to operating income of $42.3 million in the prior year. The Company recorded net income of $103.8 million or $2.31 per basic and $2.20 per diluted share in 2022, compared to a net income of $32.3 million or $0.74 per basic and $0.69 diluted share in 2021.
Hudson reduced total outstanding debt from $94.9 million at December 31, 2021 to $46.8 million at December 31, 2022. Stockholders’ equity improved to $175.0 million at December 31, 2022 as compared to $70.9 million at December 31, 2021.
Brian F. Coleman, President and Chief Executive Officer of Hudson Technologies commented,
“2022 was a tremendous year for Hudson as evidenced by record revenues, and enhanced profitability. We delivered a solid fourth quarter consistent with historical fourth quarter performance, which is typically our lowest revenue quarter because it falls outside of our nine-month selling season. During the fourth quarter of 2022, gross margin fell just below our long-range target gross margin of 35%, but we do not believe this slightly lower fourth quarter gross margin will affect our long-term target. With the enhanced profitability and strong free cash flow achieved in 2022, we substantially reduced our total outstanding debt from approximately $95 million at year-end 2021, to $47 million at year-end 2022. The success of our operational execution allowed us to strengthen our balance sheet, providing improved financial flexibility as we begin moving through 2023.
“We remain optimistic that the ongoing stepdown in HFC production and consumption allowances mandated by the AIM Act will benefit our business. The 10% stepdown in virgin production and consumption that began in 2022 remains in place for 2023, as we track toward a 40% baseline reduction beginning in 2024. As we’ve previously mentioned, we believe the current phasedown schedule will drive higher demand for our reclaimed refrigerants as virgin HFCs become increasingly scarce. Likewise, we are encouraged by legislation at both the federal and state levels that promotes the use of reclaimed refrigerant.
“Hudson has held a leadership role in the refrigerant industry for more than thirty years, and we have long been committed to developing sustainable solutions around responsible refrigerant management and the adoption of reclamation. We are uniquely positioned to leverage our expertise and industry-leading reclamation technology to help drive the transition to more efficient cooling equipment and greener refrigerants, while also servicing the existing installed base with reclaimed refrigerants as the industry continues to evolve,” Mr. Coleman concluded.
Hudson Technologies to Host Conference Call to Discuss Fourth Quarter and Full Year 2022 Results
Woodcliff Lake, NJ – February 23, 2023 – Hudson Technologies, Inc. (NASDAQ: HDSN) will host a conference call and webcast on Wednesday, March 8, 2023 at 5:00 p.m. Eastern Time to discuss the Company’s fourth quarter and full year 2022 results.
Click here to access the live webcast.
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: 799619.
A replay of the teleconference will be available until April 7, 2023 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 47630.
Hudson Technologies Reports Record Third Quarter 2022 Results
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.
Hudson Technologies Reports Record Second Quarter 2022 Results; Raises 2022 Forecast and Provides Update on Longer-Term Targets
WOODCLIFF LAKE, NJ – AUGUST 3, 2022 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the second quarter ended June 30, 2022.
For the quarter ended June 30, 2022, Hudson reported revenues of $103.9 million, an increase of 72% compared to revenues of $60.5 million in the comparable 2021 period. Second quarter revenue growth was driven by increased selling prices for certain refrigerants during the period. Gross margin in the second quarter of 2022 increased to 55%, compared to 36% in the second 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 $49.8 million in the second quarter of 2022, compared to operating income of $14.4 million in the prior year period. The Company recorded net income of $39.8 million or $0.89 per basic and $0.84 per diluted share in the second quarter of 2022, compared to net income of $11.3 million or $0.26 per basic and $0.24 per diluted share in the same period of 2021. Net income during the second quarter of 2022 included an incremental non-cash tax benefit of $11.6 million associated with the release of an income tax valuation allowance as a result of increased profitability.
For the six months ended June 30, 2022, Hudson reported revenues of $188.3 million, an increase of 100% compared to revenues of $94.3 million in the first six months of 2021. Revenue growth in the first half of 2022 was driven by an increase in selling prices for certain refrigerants during the period. Gross margin in the first six months of 2022 increased to 55%, compared to 33% in the first six 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 $88.1 million in the first six months of 2022, compared to operating income of $16.1 million in the prior year period. The Company recorded net income of $69.4 million or $1.55 per basic and $1.48 per diluted share in the first six months of 2022, compared to net income of $10.2 million or $0.23 per basic and $0.22 per diluted share in the same period of 2021. As stated above, net income during the first six months of 2022 included an incremental non-cash tax benefit of $11.6 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,
“We delivered strong second quarter results, as evidenced by substantial revenue growth, significantly enhanced margins and increased profitability. We’re seeing consistent momentum as our selling season progresses and our second quarter results reflect sustained strength in the pricing of certain refrigerants. Moreover, our first half profitability and increased cash flow have strengthened our balance sheet by reducing our total debt by $11.1 million during the second quarter of 2022.
“As we’ve mentioned before, 2022 marks the start of industry compliance with the AIM Act, which mandates a 10% stepdown in production and consumption allowances for virgin HFCs in both 2022 and 2023 and a 40% baseline reduction in 2024. This phasedown is expected to drive a significant inflection point for our business as the industry begins to rely on reclaimed refrigerant to meet its HFC needs. As a leading reclaimer, Hudson is uniquely positioned to fill the anticipated HFC supply gap as virgin production is phased out, as well as meeting the demand of all other refrigerants, including CFCs, HCFCs and HFOs. We remain committed to providing the products and services to enable an industry-wide transition to cleaner refrigerants and more efficient equipment. This is an exciting time for our Company, and we are intent on growing our leadership role and strategic partnerships in the refrigerant marketplace and as a steward of environmentally sound, sustainable refrigerant management.”
Company Increases 2022 Forecast and Provides New 3-Year Target
Mr. Coleman continued, “Given the pricing dynamics to date for the current selling season, we are increasing our previously stated 2022 forecast and longer-term targets. Based on current pricing levels, we should see revenues in excess of $290 million for full year 2022. While we continue to believe margin performance for the full year will moderate due to increases in inventory cost and anticipated stabilization in sales prices during the balance of this season, with our visibility today we now believe full year blended gross margin will be at least in the mid 40% range.
“In 2022, we are seeing the accelerated shift to what we expect will be significantly higher and sustained profitability for the business going forward. Assuming further HFC price increases related to the HFC phasedown under the AIM Act, albeit at a slower pace than we saw in 2022, we are targeting annualized revenue of greater than $400 million by 2025 with gross margins remaining above historical levels but moderating over the next three years to approximately 35%. This shift we are seeing to significantly increased profits for the business provides considerably enhanced financial flexibility for us to invest in our long- term growth while also continuing to reduce debt,” Mr. Coleman concluded.
Hudson Technologies Reports Record First Quarter 2022 Results
WOODCLIFF LAKE, NJ – MAY 4, 2022 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the first quarter ended March 31, 2022.
For the quarter ended March 31, 2022, Hudson reported revenues of $84.3 million, an increase of 149% compared to revenues of $33.8 million in the comparable 2021 period. First quarter revenue growth was driven by increases in volumes and selling prices for certain refrigerants during the period. Gross margin in the first quarter of 2022 increased to 54%, compared to 27% in the first quarter of 2021, mainly due to the significant increase in selling price without a material appreciation in the cost basis of certain refrigerants sold. Hudson reported operating income of $38.3 million in the first quarter of 2022, compared to operating income of $1.7 million in the prior year period.
The Company recorded net income of $29.6 million or $0.66 per basic and $0.63 per diluted share in the first quarter of 2022, compared to a net loss of $1.1 million or ($0.02) per basic and diluted share in the same period of 2021. Net income during the first quarter of 2022 included $4.6 million of one-time interest expense associated with the refinancing of the Company’s term loan. As previously announced, during the first quarter the Company entered into a new $85 million term loan agreement with TCW Asset Management, LLC and has amended its existing asset-based lending facility to increase the overall facility to $90 million.
Brian F. Coleman, President and Chief Executive Officer of Hudson Technologies commented, “Our 2022 selling season is off to a strong start, with record first quarter revenues and a path towards another record full year. The first quarter demonstrated substantially improved gross margin and significantly enhanced profitability as compared to last year’s first quarter. Our first quarter performance reflected the continued upward trend in average pricing for certain refrigerants and also benefitted from increased sales volume as we continue to focus on strategic customers who value our sustainability offerings. We previously communicated longer term targets for 2023 through 2024 with annualized revenue and operating income of $350 million and $72 million, respectively. With our visibility today, assuming the first quarter pricing trend continues, we believe we are on a path to reach those longer term targets at a faster rate than originally expected, as we begin to experience the initial impact of the AIM Act and its regulations. While our first quarter gross margin was particularly strong, we believe margin performance for the full year will moderate to levels similar to that of last year. In addition, based on current pricing trends we should see revenues in excess of $270 million in 2022.
“With the start of 2022, our industry must now comply with the AIM Act, which mandates a 10% stepdown in production and consumption allowances for virgin HFCs in both 2022 and 2023. Beginning in 2024, with the 40% reduction in the baseline, we expect to experience a significant inflection point for our business model and sustainable offerings. HFCs are currently the most commonly used refrigerants and as a leading reclaimer, we are uniquely positioned to fill the anticipated HFC supply gap as virgin production is phased out. With our reclamation capabilities and robust distribution network, Hudson is poised to continue to lead the industry’s orderly transition to greener, more environmentally-friendly refrigerants, and we welcome this opportunity to promote the circular economy of refrigerants and the transition to cleaner, more efficient next generation cooling equipment and gases. We’re energized by the opportunities we’re seeing to expand our market share and leadership role in the refrigerant marketplace throughout 2022 and for decades to come,” Mr. Coleman concluded.
Hudson Technologies Reports Record Fourth Quarter and Year End 2021 Results
WOODCLIFF LAKE, NJ – MARCH 8, 2022 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the fourth quarter and year ended December 31, 2021.
For the quarter ended December 31, 2021, Hudson reported revenues of $37.8 million, an increase of 71% compared to revenues of $22.1 million in the comparable 2020 period. Fourth quarter revenue growth was driven by increased selling prices for certain refrigerants during the period. Gross margin in the fourth quarter of 2021 was 45%, compared to 25% in the fourth quarter of 2020, mainly due to the aforementioned increase in selling price of certain refrigerants. Hudson reported operating income of $9.3 million in the fourth quarter of 2021, compared to an operating loss of $1.7 million in the prior year period. The Company recorded net income of $6.2 million or $0.14 per basic and $0.13 per diluted share in the fourth quarter of 2021, compared to a net loss of $4.7 million or ($0.11) per basic and diluted share in the same period of 2020.
For the year ended December 31, 2021, Hudson reported revenues of $192.7 million, an increase of 31% compared to revenues of $147.6 million for full year 2020. The revenue growth was driven by increased selling prices for certain refrigerants during the period. Gross margin during for the year ended December 31, 2021 was 37%, compared to 24% for full year 2020, mainly due to the aforementioned increase in selling price of certain refrigerants. Hudson reported operating income of $42.3 million for full year 2021 compared to operating income of $5.9 million in the prior year. The Company recorded net income of $32.3 million or $0.74 per basic and $0.69 per diluted share in fiscal 2021, compared to a net loss of $5.2 million or ($0.12) per basic and diluted share in fiscal 2020.
Subsequent to the close of the fourth quarter, the Company announced it has entered into a new $85 million term loan agreement with TCW Asset Management, LLC and has amended its existing asset-based lending facility to increase the overall facility to $90 million. In conjunction with entering into the new term loan facility and amended revolving credit facility, the Company’s existing term loan was repaid in full and terminated.
Brian F. Coleman, President and Chief Executive Officer of Hudson Technologies commented,
“We’re pleased to have closed 2021 with record fourth quarter and full year results, reflecting significant revenue growth, enhanced margins and improved profitability. Our fourth quarter has historically been our weakest, as it falls outside of our traditional nine-month selling season from January to September. However, following the close of the 2021 selling season, the industry saw continued strength in the average selling prices of certain refrigerants. Assuming this pricing trend continues for the 2022 selling season, we could see revenues exceeding $270 million in 2022. As we begin moving through 2022, we are focused on maintaining effective inventory management so that we are well positioned to meet customer demand as virgin HFCs begin to become scarce.
“As we’ve previously discussed, the AIM Act has introduced a mandated 10% stepdown in production and consumption allowances for virgin HFCs in 2022 from the original baseline. This presents an opportunity for Hudson, since the installed base of HFC equipment continues to expand, and as virgin supply tightens, we expect the demand for HFCs will drive accelerated reclamation activity to fill the anticipated supply gap. With our industry-leading reclamation capabilities, longstanding customer relationships and efficient distribution network, we are positioned to enable the transition to greener refrigerants. Since our Company’s inception, we have been committed to providing a sustainable alternative to virgin refrigerant production, and our technology is capable of reclaiming all types of refrigerant, including next generation HFO gases. As we move through 2022, we believe we have a tremendous opportunity to continue our support of the industry transition to greener refrigerants and to grow our market position as both a supplier and a reclaimer servicing the evolving refrigerant landscape.
“We are pleased to have completed the refinancing of our debt, which we believe will provide enhanced financial flexibility for the continued growth of our business. With the new debt structure, our cost of capital and interest expense will improve meaningfully, with an approximate 3% reduction in the overall effective interest rate. We appreciate the support of our new and existing lending partners and look forward to driving long-term growth and cash flows as our reclamation services play an increasingly important role in the transition to more environmentally friendly refrigerants,” Mr. Coleman concluded.
Hudson Technologies Reports Third Quarter 2021 Results
PEARL RIVER, NY – NOVEMBER 3, 2021 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the third quarter and nine months ended September 30, 2021.
For the quarter ended September 30, 2021, Hudson reported revenues of $60.6 million, an increase of 46% compared to revenues of $41.5 million in the comparable 2020 period. Third quarter revenue growth was driven by increased selling prices of certain refrigerants during the period. Gross margin in the third quarter of 2021 was 39%, compared to 22% in the third quarter of 2020, mainly due to the aforementioned increase in selling price of certain refrigerants. Hudson reported operating income of $16.9 million in the third quarter of 2021, compared to operating income of $2.1 million in the prior year period. The Company recorded net income of $15.9 million or $0.36 per basic and $0.34 per diluted share in the third quarter of 2021, compared to net income of $39 thousand or $0.00 per basic and diluted share in the same period of 2020.
For the nine months ended September 30, 2021, Hudson reported revenues of $155.0 million, an increase of 24% compared to revenues of $125.5 million in the first nine months of 2020. The revenue growth was driven by increased selling prices for certain refrigerants during the period. Gross margin during the nine months ended September 30, 2021 was 35%, compared to 24% in the first nine months of 2020, mainly due to the aforementioned increase in selling price of certain refrigerants. Hudson reported operating income of $33.0 million for the first nine months of 2021 compared to operating income of $7.7 million in the prior year period. The Company recorded net income of $26.1 million or $0.60 per basic and $0.56 per diluted share in the first nine months of 2021, compared to a net loss of $0.5 million or ($0.01) per basic and diluted share in the same period of 2020.
At September 30, 2021, the Company had approximately $53 million of total availability, consisting of cash and cash equivalents plus revolving loan availability.
Brian F. Coleman, President and Chief Executive Officer of Hudson Technologies commented,
“The close of the third quarter represents a strong finish to our traditional nine month selling season. We’re pleased to have delivered substantial revenue growth, increased margins and enhanced profitability in the quarter and for the 2021 selling season. Our improved performance was primarily related to significantly increased average selling prices of certain refrigerants, partially offset by reduced demand volume due to both a greater focus on higher margin customers as we have realigned our sales strategy, and a slower than expected reopening of businesses. In addition, there has been a far greater disruption in the supply chain, both with product availability and transportation, which has impacted our entire industry, as well as the overall economy. We’re focused on proactively managing our inventory so that we will be well positioned to continue to serve our customer base throughout the 2022 cooling season.
“In September, the EPA published the final rule allocating allowances for the production and consumption of HFCs, as mandated by the AIM Act, introducing a stepdown of 10% in 2022 from baseline levels. As we expected, Hudson received an allocation allowance for calendar year 2022 equal to approximately 3 million Metric Tons Exchange Value Equivalents, or 1% of the total HFC consumption allocation, with allowances for 2023 and beyond to be determined at a later date. Notably, subsequent allowances must establish a 40% reduction in virgin production and importation from the current baseline, in 2024. We expect the reduction in virgin HFC supply will help accelerate reclamation activity in the near term and with the final HFC allowances in place, we believe we are competitively positioned through both our reclamation capabilities and our robust distribution network, to capture market share as both a supplier and a reclaimer, serving the large and growing installed base of HFC equipment. Please remember that our technology has the ability to service and reclaim any refrigerant, including next generation HFOs, well into the future. We support the global efforts to transition our industry to more environmentally friendly gases, and believe we have a unique opportunity to provide a sustainable alternative to virgin refrigerants as the HFC supply tightens,” Mr. Coleman concluded.
Hudson Technologies Reports Record Second Quarter 2021 Revenues
PEARL RIVER, NY – AUGUST 4, 2021 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the second quarter and six months ended June 30, 2021.
For the quarter ended June 30, 2021, Hudson reported revenues of $60.5 million, an increase of 27% compared to revenues of $47.7 million in the comparable 2020 period. Second quarter revenue growth was driven by increased demand as well as increased selling prices for certain refrigerants during the period. Gross margin in the second quarter of 2021 was 36%, compared to 27% in the second quarter of 2020, mainly due to the aforementioned increase in selling price of certain refrigerants. Hudson reported operating income of $14.4 million in the second quarter of 2021 compared to operating income of $5.2 million in the prior year period. The Company recorded net income of $11.3 million or $0.26 per basic and $0.24 per diluted share in the second quarter of 2021, compared to net income of $2.4 million or $0.06 per basic and diluted share in the same period of 2020.
For the six months ended June 30, 2021 Hudson reported revenues of $94.3 million, an increase of 12% compared to revenues of $84.0 million in the first six months of 2020. The revenue growth was driven by increased demand as well as increased selling prices for certain refrigerants during the period. Gross margin in the first half of 2021 was 33%, compared to 25% in the first half of 2020, mainly due to the aforementioned increase in selling price of certain refrigerants. Hudson reported operating income of $16.1 million for the first six months of 2021 compared to operating income of $5.6 million in the prior year period. The Company recorded net income of $10.2 million or $0.23 per basic and $0.22 per diluted share in the first half of 2021, compared to a net loss of $0.5 million or ($0.01) per basic and diluted share in the same period of 2020.
At June 30, 2021, the Company had approximately $41 million of total availability, consisting of cash and cash equivalents plus revolving loan availability.
Brian F. Coleman, President and Chief Executive Officer of Hudson Technologies commented,
“We are pleased to have delivered strong second quarter results as demonstrated by substantial revenue growth and significantly improved profitability. Our performance was driven by increased demand as well as favorable pricing trends across our portfolio of refrigerants. We view the selling season as a nine-month period, and the second quarter has historically been a strong quarter for us as it typically coincides with warmer weather in the North and Northeast resulting in the start-up of cooling systems. During the second quarter, our business also benefitted from the favorable impact of the U.S. economy reopening. As we move through the balance of our selling season, we’re optimistic about the activity and interest we’re seeing for our products in the marketplace.
“Additionally, from a regulatory perspective, we’re looking forward to the anticipated publication of HFC allocations in September as the allocation portion of the AIM Act goes into effect. When the allocations become public, we’ll have more visibility around how the industry will be positioned to supply the large and growing installed base of HFC systems as virgin production begins it phasedown starting in 2022. The AIM Act establishes a cumulative 40% reduction in the baseline by 2024 and we anticipate that reclamation will be critical to maintaining necessary supply during this HFC phasedown period. Given our reclamation capabilities and robust distribution network, Hudson is uniquely positioned as both a supplier and a reclaimer, to meet potential supply shortfalls as virgin HFC production is phased down to 15% in the year 2036. We believe the upcoming HFC phasedown represents a tremendous long-term growth opportunity and will create a favorable environment for us to capture additional business with our sustainable, reclaimed refrigerant offerings,” Mr. Coleman concluded.
Hudson Technologies Reports First Quarter 2021 Results
PEARL RIVER, NY – MAY 5, 2021 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the first quarter ended March 31, 2021.
For the quarter ended March 31, 2021, Hudson reported revenues of $33.8 million, a decrease of 7% compared to revenues of $36.4 million in the comparable 2020 period. The decrease in revenue was primarily due to decreased volume, as the COVID pandemic shutdowns did not have as great an impact to the first quarter of 2020 as compared to 2021. The demand decline was partially offset by an increase in selling price of certain refrigerants. Gross margin in the first quarter of 2021 was 27%, compared to 23% in the first quarter of 2020, mainly due to the aforementioned increase in selling price of certain refrigerants. Hudson reported operating income of $1.7 million in the first quarter of 2021 compared to operating income of $0.4 million in the prior year period. The Company recorded a net loss of $1.1 million or ($0.02) per basic and diluted share in the first quarter of 2021, compared to a net loss of $2.9 million or ($0.07) per basic and diluted share in the same period of 2020. At March 31, 2021, the Company had approximately $32 million of total availability, consisting of the cash balance plus revolving loan availability.
Brian F. Coleman, President and Chief Executive Officer of Hudson Technologies commented,
“As we kick off the 2021 selling season, we are optimistic that we’ll begin to see a broader reopening of the economy, and specifically a return to facilities such as schools, office buildings and other venues that represent the end markets for many of our customers. With that in mind, we are prepared to meet potential demand as the nine-month cooling season continues, particularly as cooling systems come back online with the gradual return to ‘business as usual’ and we move into the warmer late spring and summer weather.
“Looking at the regulatory landscape, we are encouraged by the progress made with the passing of the AIM Act in December 2020. As a leading source of all refrigerants, Hudson is keenly focused on our role as environmental and sustainability legislation is adopted. Our capabilities as a reclaimer uniquely position us to support the phase down of HFC refrigerants, as we can reclaim and recycle these refrigerants, positioning us as an effective resource in the circular economy of the refrigerant industry. The AIM Act requires the phasedown of HFC production over the next 15 years, with a cumulative 40% reduction in the baseline scheduled to take place in just 2 ½ years. The installed base of HFC systems is large and growing, so reclamation will be a key component to maintaining necessary supply during an orderly phasedown, and this presents a significant long-term opportunity for Hudson to become an HFC supplier, while also supporting the transition away from production of virgin HFCs. We’re excited by the opportunities we’re seeing not only to grow our business, but also to provide our services to benefit the environment,” Mr. Coleman concluded.
Hudson Technologies Reports Fourth Quarter 2020 Results
PEARL RIVER, NY – MARCH 3, 2021 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the fourth quarter and year ended December 31, 2020.
For the quarter ended December 31, 2020, Hudson reported revenues of $22.1 million, a decrease of 14% compared to revenues of $25.8 million in the comparable 2019 period. The decrease in revenue was primarily due to decreased volume, as the COVID-19 pandemic and the associated closures of public venues such as commercial and recreational facilities, schools and universities across the U.S. negatively impacted the Company’s end markets and overall demand for refrigerants for much of the year, partially offset by an increase in selling price of certain refrigerants. Gross margin in the fourth quarter of 2020 was 25%, compared to 19% in the fourth quarter of 2019, mainly due to the aforementioned increase in selling price of certain refrigerants. Hudson reported an operating loss of $1.7 million in the fourth quarter of 2020 compared to an operating loss of $4.8 million in the prior year period. The Company recorded a net loss of $4.7 million or ($0.11) per basic and diluted share in the fourth quarter of 2020, compared to a net loss of $10.8 million or ($0.25) per basic and diluted share in the same period of 2019.
For the year ended December 31, 2020, Hudson reported revenues of $147.6 million, a decrease of 9% compared to $162.1 million in 2019. The decrease in revenue was primarily due to decreased volume, related to the pandemic-driven closures described above. Gross margin for full year 2020 improved to 24% compared to gross margin of 11% for the full year 2019. The Company reported operating income of $5.9 million for 2020 compared to an operating loss of $15.8 million in 2019. The Company’s net loss for 2020 was $5.2 million, or ($0.12) per basic and diluted share, compared to a net loss of $25.9 million, or ($0.61) per basic and diluted share in 2019, which included a $9.2 million non-cash inventory adjustment mainly due to declines in selling prices of certain refrigerants during that time period.
Brian F. Coleman, President and Chief Executive Officer of Hudson Technologies commented, “2020 was a challenging year for our industry, characterized by the public health and economic uncertainties caused by the global COVID-19 pandemic. As we begin 2021, we are optimistic that the widespread closures related to the virus will begin to subside and enable the broader re-opening of our economy. With that in mind, we are planning and preparing for the 2021 selling season so that we are ready to meet potential demand as more cooling systems return to operation and we look forward to fully re-engaging with our customers as they continue to come back online.”
Hudson Technologies Reports Third Quarter 2020 Results
PEARL RIVER, NY – NOVEMBER 5, 2020 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the third quarter and nine months ended September 30, 2020.
For the quarter ended September 30, 2020, Hudson reported revenues of $41.5 million, a decrease of 9% compared to revenues of $45.6 million in the comparable 2019 period. The decrease is primarily due to a decline in volume, as the continued COVID-19 pandemic and the associated closures of public venues such as office buildings, gyms, schools and universities across the U.S. negatively impacted the Company’s end markets and overall demand for refrigerants. Gross margin in the third quarter of 2020 was 22%, compared to 17% in the third quarter of 2019. The Company reported operating income of $2.1 million for the third quarter of 2020 compared to an operating loss of $1.2 million in the third quarter of 2019. The Company recorded net income of $39,000 or $0.00 per basic and diluted share in the third quarter of 2020, compared to net income of $2.7 million or $0.06 per basic and diluted share in the same period of 2019. During the third quarter of 2019, the Company received $8.9 million in proceeds from the working capital settlement arising from the acquisition of Aspen Refrigerants, Inc. (“ARI”), which led to the net profit in that quarter. Hudson recorded non-GAAP Adjusted EBITDA of $4.6 million in the third quarter of 2020 compared to Adjusted EBITDA of $3.9 million in the third quarter of 2019. (Adjusted EBITDA is a non-GAAP financial measure – see the description of Adjusted EBITDA and tabular Reconciliation of Net Income (Loss) to Adjusted EBITDA in the supplemental table included at the end of this release).
For the nine months ended September 30, 2020, Hudson reported revenues of $125.5 million, a decrease of 8% compared to $136.3 million in the first nine months of 2019. The decrease in revenue was primarily due to decreased volume, related to the pandemic-driven closures described above. Gross margin for the first nine months of 2020 improved to 24% compared to gross margin of 9% for the same period in 2019. The Company reported operating income of $7.7 million for the first nine months of 2020 compared to an operating loss of $11.0 million in the first nine months of 2019. The Company’s net loss for the first nine months of 2020 was $0.5 million, or ($0.01) per basic and diluted share, compared to a net loss of $15.2 million, or ($0.36) per basic and diluted share, in the first nine months of 2019, which included a $9.2 million non-cash inventory adjustment offset by the $8.9 settlement proceeds described above. For the first nine months of 2020, Hudson recorded non-GAAP Adjusted EBITDA of $15.7 million compared to Adjusted EBITDA of $9.9 million in the first nine months of 2019. For the trailing twelve months ended September 30, 2020, Hudson recorded non-GAAP Adjusted EBITDA of $14.9 million, a 75% increase from the $8.5 million of Adjusted EBITDA recorded during the trailing twelve months ended September 30, 2019. (Adjusted EBITDA is a non-GAAP financial measure – see the description of Adjusted EBITDA and tabular Reconciliation of Net Income (Loss) to Adjusted EBITDA in the supplemental table included at the end of this release).
Brian F. Coleman, President and Chief Executive Officer of Hudson Technologies commented, “Our third quarter performance was largely consistent with our expectations as we, and the rest of our industry, continued to contend with demand declines associated with the ongoing closure of many public venues across the U.S. Given the selling environment, we’re pleased to have achieved improved gross margin, increased operating income and breakeven profitability in the third quarter. Moreover, we repaid $16.5 million of debt during the third quarter of 2020, and as of September 30, 2020, we have fully paid down our revolver, while increasing our cash balance to $9.2 million. As of September 30, 2020, our overall availability, which includes our cash balance and revolver availability, was $41.7 million, which will provide financial flexibility for the fourth quarter and beyond.
“As we move through the final months of 2020, we remain focused on continuing to navigate the uncertainties of this pandemic. Historically, the fourth quarter is typically our quietest quarter, one in which we plan our operational strategy to anticipate and meet the needs of our customers for the following year’s cooling season. We are optimistic that 2021 will bring more consistent re-openings for businesses and schools and we are planning accordingly so that Hudson is well positioned to help meet potential demand as more cooling systems are turned back on. We remain committed to protecting the health and safety of our employees while also maintaining our product supply for our customers across all channels.”
Hudson Technologies Reports Second Quarter 2020 Net Income of $2.4 Million or $0.06 Per Share
PEARL RIVER, NY – AUGUST 5, 2020 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the second quarter and six months ended June 30, 2020.
For the quarter ended June 30, 2020, Hudson reported revenues of $47.7 million, a decrease of 14.8% compared to revenues of $56.0 million in the comparable 2019 period. The decrease is primarily due to a decline in volume, partially offset by an increase in selling price, of certain refrigerants sold during the second quarter of 2020, compared to the second quarter of 2019. Gross margin in the second quarter of 2020 was 26.6%, compared to negative gross margin in the second quarter of 2019. The Company reported operating income of $5.2 million for the second quarter of 2020 compared to an operating loss of $10.0 million in the second quarter of 2019. During the second quarter of 2019 the Company recorded a lower of cost or net realizable value adjustment to its inventory of $9.2 million, mainly due to declines in selling prices of certain refrigerants at that time. The Company recorded net income of $2.4 million or $0.06 per basic and diluted share in the second quarter of 2020, compared to a net loss of $13.8 million or ($0.32) per basic and diluted share in the same period of 2019.
For the six months ended June 30, 2020, Hudson reported revenues of $84.0 million, a decrease of 7.4% compared to $90.7 million in the first six months of 2019. The decrease in revenue was primarily due to decreased volume, partially offset by increased pricing of certain refrigerants. Gross margin for the first six months of 2020 improved to 25.0% compared to gross margin of 5.1% in the first half of 2019. The Company reported operating income of $5.6 million for the first six months of 2020 compared to an operating loss of $9.7 million in the same period of 2019. The Company’s net loss for the first six months of 2020 was $0.5 million, or ($0.01) per basic and diluted share, compared to a net loss of $17.8 million, or ($0.42) per basic and diluted share, in the first half of 2019, which included the above mentioned $9.2 million non-cash inventory adjustment.
Brian F. Coleman, President and Chief Executive Officer of Hudson Technologies commented, “We were pleased to deliver solid second quarter results, particularly as we continue to navigate the challenging landscape associated with the COVID-19 virus and the associated impact to our economy. During the quarter, the closures to public venues, such as office buildings, recreation centers, schools and universities across the U.S. impacted end markets and demand for refrigerants. While pricing remained consistent in the quarter, volume declines adversely impacted our overall revenues. Nonetheless, we delivered improved gross margin for the quarter, achieved solid operating income and returned to profitability.
“There are still many uncertainties associated with this pandemic and we remain focused on the elements of our business that we can control: protecting the health and safety of our employees and keeping our products in supply to best serve our customers across all channels. We’ve been in this business for more than thirty years, and our ability to adapt to changing economic and industry landscapes while executing our operational strategy is a strength we continue to rely upon. Despite the challenging market environment, Hudson generated over $6 million of operating cash flow during the second quarter of 2020. The Company’s financial position and liquidity remain strong, with total liquidity at June 30, 2020 of approximately $39 million, which includes cash and revolver availability. Finally, as announced in an 8-K this past Monday, we’ve met certain performance targets set forth in our Credit Agreement, and as a result of this achievement, we have terminated the services of our Chief Restructuring Officer.
“As you know, in late June, our Company suffered the unexpected loss of our founder Kevin J. Zugibe, P.E. He was an industry pioneer who brought remarkable passion, expertise and energy to Hudson, and he is greatly missed. In his years building the Company, Kevin recognized the importance of establishing a strong management team to drive and support Hudson’s growth. All of our employees are committed to continuing to grow and execute on Kevin’s legacy, and as one of Kevin’s longstanding partners for over 20 years, I can assure you that we are focused on our Company’s success as we move through the coming months and years,” Mr. Coleman concluded.
Hudson Technologies Reports First Quarter 2020 Revenues of $36.4 Million, Gross Margin of 23% and Liquidity of $27 Million
Pearl River, NY – May 6, 2020 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the first quarter ended March 31, 2020.
For the quarter ended March 31, 2020, Hudson reported revenues of $36.4 million, a 5% increase compared to $34.7 million in the comparable 2019 period, primarily due to an increase in the volume of refrigerants sold. Gross margin was 23% for the first quarter of 2020 compared to 20% for the first quarter of 2019. The Company reported operating income of $0.4 million for the first quarter of 2020 compared to operating income of $0.2 million for the first quarter of 2019. Net loss for the first quarter of 2020 was $2.9 million, or ($0.07) per basic and diluted share, compared to a net loss of $4.0 million or ($0.09) per basic and diluted share in the first quarter of 2019.
Kevin J. Zugibe, Chairman and Chief Executive Officer of Hudson Technologies commented, “First let me say that the novel coronavirus disease, COVID-19, has had a dramatic impact on every person, business and industry, and Hudson is no exception. However, Hudson operates in a ‘critical infrastructure industry’ and is an essential business as defined by the U.S. government. We have kept our plants operating and have been effectively running our operations, while following all state and federal guidelines to keep our employees safe and healthy. Our priorities throughout this pandemic have been, and will continue to be, to ensure the health and safety of our employees; to keep our products in supply and to maintain the quality and safety of our products; to best serve our customers across all channels as they adapt to the crisis; and, to position ourselves to emerge strong when the crisis ends.
“As we look back on the first quarter, we saw an increase in volume over the same period last year, building on the increased volume we saw in 2019, and we are seeing some strengthening in the pricing of R-22. We are a few weeks away from the prime selling season so it is still early in the 2020 season to know how pricing will develop, and it also remains to be seen as to what effect the weather and the economic impact of COVID-19 will have on the price and demand for refrigerants. Additionally, during the first quarter, we improved our gross margins in 2020 over 2019 and believe we have the opportunity to further drive improved margins in 2020 as we replace higher priced inventory with lower priced product. We believe that customer inventories are low and, with the elimination of R-22 production and importation in 2020, we expect to see a tightening in the supply of virgin R-22. Finally, the Company’s financial position and liquidity remain strong, with total liquidity at March 31, 2020 of approximately $27 million, which includes cash and revolver availability.
“As we proceed through 2020, we are concerned that the economic factors resulting from the various governmental restrictions that have been put in place could have a negative impact on the demand for refrigerants. We continue to focus on implementing various strategies to grow our leadership position in the refrigerant industry, and on leveraging our strong reclamation abilities and our presence at key points in the supply chain.”
Hudson Technologies Reports Fourth Quarter 20119 Results
Pearl River, NY – March 4, 2020 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the fourth quarter and year ended December 31, 2019.
For the quarter ended December 31, 2019 Hudson reported revenues of $25.8 million, slightly higher than revenues of $25.7 million in the comparable 2018 period. Gross margin in the fourth quarter of 2019 was 18.5%, compared to gross margin of 12% in the fourth quarter of 2018. The Company recorded a net loss of $10.8 million or ($0.25) per basic and diluted share in the fourth quarter of 2019, compared to a net loss of $8.1 million or ($0.19) per basic and diluted share in the same period of 2018. Approximately $1.9 million of this variance relates to higher interest expense mainly related to the write off of deferred financing costs from our previous revolving facility, which was replaced in December 2019. In addition, during the fourth quarter of 2019, the Company incurred additional and nonrecurring lender-related fees and expenses related to the closure of a facility.
For the year ended December 31, 2019, Hudson reported revenues of $162.1 million, a decrease of 2.7% compared to $166.5 million for full year 2018. The decrease in revenue was primarily due to further pricing correction in 2019, partially offset by higher refrigerant sales volume and higher revenue from our DLA contract. Gross margin for calendar year 2019 was $17.2 million, or 10.6%, as compared to negative gross margin of $7.4 million for 2018. The Company’s net loss for 2019 was $25.9 million, or $0.61 per basic and diluted share, which includes a $9.2 million non-cash inventory write down partially offset by $8.9 million of settlement proceeds from the working capital settlement arising from the acquisition of Aspen Refrigerants, Inc. (“ARI”), as compared to net loss of $55.7 million or $1.31 per basic and diluted share in 2018. Full year 2018 net loss includes a $35.9 million non-cash inventory write down.
Kevin J. Zugibe, Chairman and Chief Executive Officer of Hudson Technologies commented,
“2019 was another challenging year for Hudson and for the entire industry, as we saw further price erosion in nearly all refrigerants through September. However, it was also a year where we saw growth in our sales volume, reduction in costs and improvement in margins as we progressed through the year. Entering 2020 we have seen some encouraging signs in the industry as to pricing and we are currently seeing pricing for R-22 above $10 per pound. With the elimination of virgin production and importation in 2020, we expect to see tighter supply of R-22, and we believe our ability to reclaim and resell R-22 creates a tremendous opportunity to position Hudson to address the anticipated tightening of supply and become the leading producer of R-22.
“Additionally, during the fourth quarter, we improved our margins in 2019 over 2018 and believe we have the opportunity to further drive improved margins in 2020 as we replace higher priced inventory with lower priced product. We saw some of this improvement in 2019 as we reduced our inventory by 42% through a combination of selling off higher priced inventory and managing more towards a just-in-time inventory model. During 2019, the Company generated $34 million of cash flow from operations, which included $15.2 million of cash interest expense, and paid down $31 million of debt, including $14 million of long term debt in the fourth quarter of 2019. As of December 31, 2019, the Company had over $22 million of availability through its new revolving facility. The new term loan amendment and revolving facility will offer us flexibility in our operations for 2020 and the future.
“We’re optimistic about the positive momentum we’re seeing for the regulation of HFC refrigerants. There is growing bipartisan support for the American Innovation and Manufacturing Act of 2019, or the AIM Act, which, if enacted, would phase down HFC production. Whether the AIM Act is passed, the process first occurs at the state level, or through the actual ratification of the Kigali amendment, we anticipate a phase down of HFCs and we expect to see the establishment of an allocation system as well as a tightening in the supply/demand balance for HFCs that will likely result in increased pricing. We believe the phase out of R-22 and phase down of HFCs continue to represent tremendous growth opportunities for our company.”
Mr. Zugibe concluded, “We have been a leader in the refrigerant and reclamation industry for a long time because we have learned to innovate and evolve during the challenging periods to become a stronger business. We remain focused on meeting the changing needs of our customers and on remaining agile in the face of fluid market dynamics as we work to increase our market share and advance our leadership position in the marketplace.”
Hudson Technologies Reports Third Quarter 2019 Results
Pearl River, NY – November 14, 2019 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the third quarter and nine months ended September 30, 2019.
For the quarter ended September 30, 2019 Hudson reported revenues of $45.6 million, an increase of 13% compared to $40.5 million in the comparable 2018 period. The increase in revenues was due to an increase in refrigerant volumes and growth with the DLA contract, offset by a decline in prices of certain refrigerants sold during the 2019 quarter when compared to 2018. Selling, general and administrative (“SG&A”) expenses for the three-month period ended September 30, 2019 were $8.3 million, compared to $7.4 million in the comparable 2018 period. The increase in SG&A was primarily attributable to professional fees and insurance expense. The Company’s net income for the third quarter of 2019, was $2.7 million, or $0.06 per basic and diluted share. During the third quarter of 2019, the Company received $8.9 million in proceeds from the working capital settlement arising from the acquisition of Aspen Refrigerants, Inc. (“ARI”). Net loss for the third quarter of 2018 was $13.9 million or $(0.33) per basic and diluted share. 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.
For the nine months ended September 30, 2019, Hudson reported revenues of $136.3 million compared to $140.8 million in the comparable 2018 period. Refrigerant selling prices declined in 2019 when compared with 2018. The overall decline in revenues was partially offset by an increase in overall refrigerant volumes and revenue from the DLA contract. SG&A expenses for the nine-month period ended September 30, 2019 were $21.2 million, compared to $26.0 million in the comparable 2018 period. The decrease in SG&A was primarily attributable to reduced payroll-related expenses, advertising and other professional fees in the first nine months of 2019. Net loss for the first nine months of 2019, which includes a $9.2 million inventory adjustment offset by the $8.9 million of settlement proceeds, was $15.2 million, or ($0.36) per basic and diluted share. Net loss in the first nine months of 2018, which included a $34.7 million inventory adjustment, was $47.6 million, or $(1.12) per basic and diluted share.
Loan Covenant Defaults
The Company failed to comply with the financial covenants contained in its term loan facility and its revolving credit facility at September 30, 2019 and is currently in default under those agreements. Other than the financial covenants, the Company has fully complied with all of its debt payment and other obligations on a timely basis. Despite the covenant violations, the Company had over $23 million of availability pursuant to the borrowing base formula in its revolving loan facility as of September 30, 2019. During the third quarter of 2019, the Company utilized its cash from operations to pay over $18 million of debt. As such, the Company does not believe that the covenant defaults relate to a liquidity issue, but relate to a leverage issue under the current covenant structure. The Company is currently seeking a waiver and amendment from its lenders to waive the covenant defaults and reset the financial covenants under both the term loan facility and the revolving credit facility. However, the lenders have the right to declare all amounts under these facilities to be immediately due and payable, and there can be no assurance that the Company will be able to obtain any such waivers or amendments on acceptable terms or at all.
Kevin J. Zugibe, Chairman and Chief Executive Officer of Hudson Technologies commented, “During the third quarter, we saw an increase in volume due to Hudson’s ability be more competitive as we sold through a large portion of our higher priced inventory. Pricing through the third quarter remained relatively consistent with pricing throughout the selling season, but was lower when compared to pricing in the third quarter of 2018. Moreover, during the 2019 sales season, one large allocation holder indicated that it is no longer supporting R-22 sales. Additionally, the remaining large allocation holders recently raised their R-22 price and we are currently experiencing the first price increase this year. We believe those actions, coupled with the ban of R-22 production and importation after 2019, will result in a tightening of R-22 supply for the 2020 selling season.
“We remain confident in the long-term opportunities for our business, particularly as we sell through the higher priced R-22 acquired with the Airgas acquisition, which we expect will result in a margin level more in line with our historical performance. The demand for cooling systems remains strong and our positioning at two key points in the supply chain, along with our ability to provide any refrigerant, anywhere at any time, remains a competitive strength as we close out 2019 and move into 2020.”
Hudson Technologies Reports Second Quarter 2019 Results and Receives $8.9 Million Settlement from Airgas
Pearl River, NT – August 14, 2019 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the second quarter and six months ended June 30, 2019.
For the quarter ended June 30, 2019 Hudson reported revenues of $56.0 million compared to $57.8 million in the comparable 2018 period. Refrigerant average selling prices declined by approximately 19%, partially offset by a 12% increase in volume. Revenue from the Defense Logistics Agency (“DLA”) increased by approximately $2.3 million in the quarter. The Company recorded lower of cost or net realizable value (“NRV”) adjustments to its inventory of $9.2 million and $34.7 million during the second quarter of 2019 and 2018, respectively. The 2019 NRV adjustment was primarily attributed to the remaining R-22 inventory purchased in connection with the acquisition of Aspen Refrigerants, Inc. (“ARI”). Selling, general and administrative (“SG&A”) expenses for the three-month period ended June 30, 2019 were $6.8 million, a decrease of $3.8 million from the $10.6 million reported during the comparable 2018 period. The reduction in SG&A was primarily attributable to professional fees pertaining to integration and services relating to the acquisition of ARI, which declined by approximately $2.5 million from the second quarter of 2018, as well as a reduction in payroll-related expenses, advertising and other professional fees in the second quarter of 2019 compared to the 2018 period. The Company’s net loss for the second quarter of 2019, which includes the above mentioned $9.2 million inventory adjustment, was $13.8 million, or $(0.32) per basic and diluted share. This compares to a net loss for the second quarter of 2018, which includes the above mentioned $34.7 million inventory adjustment, of $30.6 million or $(0.72) per basic and diluted share.
For the six months ended June 30, 2019, Hudson reported revenues of $90.7 million compared to $100.3 million in the comparable 2018 period. Refrigerant average selling prices declined by approximately 19%, partially offset by a 3% increase in refrigerant volume. Revenue from the DLA also increased by approximately $4.1 million. Net loss for the first half of 2019, which includes the above mentioned $9.2 million inventory adjustment, was $17.8 million, or ($0.42) per basic and diluted share. This compares to a net loss in the first half of 2018, which includes the above mentioned $34.7 million inventory adjustment, of $33.7 million, or $(0.79) per basic and diluted share.
In August 2019, following the end of the second quarter, the Company successfully completed the working capital adjustment process arising from the acquisition of ARI, including the settlement of related litigation, which resulted in Airgas agreeing to make a cash payment to Hudson of $8.9 million.
Loan Covenant Defaults
The Company failed to comply with the financial covenants contained in its term loan facility and its revolving credit facility at June 30, 2019 and is currently in default under those agreements. Other than the financial covenants, the Company has fully complied with all of its debt payment and other obligations on a timely basis and had over $21 million of availability pursuant to the borrowing base formula in its revolving loan facility as of June 30, 2019. As such, the Company does not believe that the covenant defaults relate to a liquidity issue but relate to a leverage issue under the current covenant structure. The Company is currently seeking a waiver and amendment from its lenders to waive the covenant defaults and reset the financial covenants under both the term loan facility and the revolving credit facility. However, the lenders have the right to declare all amounts under these facilities to be immediately due and payable, and there can be no assurance that the Company will be able to obtain any such waivers or amendments on acceptable terms or at all.
Kevin J. Zugibe, Chairman and Chief Executive Officer of Hudson Technologies commented, “This was a disappointing quarter as we continued to encounter lower prices, primarily on R-22, when compared to 2018. Temperatures remained cool for much of the quarter, which reduced urgency for customers and a ‘just in time’ buying pattern continued. On a positive note, even with poor weather conditions, we did see refrigerant sales volumes increase meaningfully during the second quarter, and, as we move through the third fiscal quarter, temperatures have risen to more seasonal levels.
“A benefit of our experience in this industry is that we have faced and managed through price corrections and disappointing sales seasons before and as we sell through the higher priced layers within our FIFO inventory, we expect to return to more historical margin levels. We remain optimistic about the long-term market opportunity and remain focused on driving growth by leveraging our positioning at two key points in the supply chain and our ability to provide any refrigerant, anywhere at any time.”
Hudson Technologies Reports First Quarter 2019 Revenues of $34.7 Million and Gross Margin of 20%
Pearl River, NT – May 1, 2019 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the first quarter ended March 31, 2019.
For the quarter ended March 31, 2019 Hudson reported revenues of $34.7 million, an 18% decrease compared to $42.4 million in the comparable 2018 period, primarily due to a reduction in the price of certain refrigerants sold. Gross margin was 20% for the first quarter of 2019 compared to 19% for the first quarter of 2018. The Company reported operating income of $0.2 million for the first quarter of 2019 compared to an operating loss of $0.9 million for the first quarter of 2018. Net loss for the first quarter of 2019 was $4.0 million, or ($0.09) per basic and diluted share, compared to a net loss of $3.1 million or ($0.07) per basic and diluted share in the first quarter of 2018. The net loss in 2018 included a $1.1 million tax benefit, while in 2019 the Company had no such tax benefit.
Kevin J. Zugibe, Chairman and Chief Executive Officer of Hudson Technologies commented, “As expected, the 2019 selling season has started with a continuation of the ‘just-in-time’ buying pattern that our customers adopted and maintained throughout the 2018 selling season. Our first quarter results were additionally impacted by further incremental price declines for most refrigerants that began in the second quarter of 2018 and, with temperatures remaining cool during the first few months of the year, there was little urgency to stock refrigerant. However, we are entering the warmer spring season and would expect to see volumes increase as we move forward to the heart of the nine-month refrigerant season.
“As we move through 2019, we remain focused on implementing strategies to grow our leadership position in the refrigerant industry by leveraging our presence at two key points in the supply chain. Our acquisition of Aspen Refrigerants has enabled us to expand our portfolio of products and services to attract a broader audience and given the growing demand for refrigeration and cooling systems, we are optimistic about the long term market opportunities.”
Hudson Technologies to Acquire Airgas-Refrigerants, Inc.
PEARL RIVER, NY – AUGUST 9, 2017 – Hudson Technologies, Inc. (NASDAQ: HDSN) (“Hudson”) today announced that it has entered into a definitive agreement to acquire Airgas-Refrigerants, Inc. (“ARI”), a subsidiary of Airgas, Inc., a leading U.S. supplier of industrial gases, in a transaction valued on a gross basis at approximately $220 million, subject to closing and post-closing adjustments.
ARI is a leading refrigerant distributor and EPA certified reclaimer in the U.S. ARI distributes, reclaims and packages refrigerant gases for a variety of end uses.
Potential benefits of the acquisition include:
- ARI’s HFC distribution business will favorably position Hudson as the industry shifts from Hydrochlorofluorocarbons (HCFCs) to Hydrofluorocarbons (HFCs).
- Broader customer network will provide Hudson with access to refrigerant for reclamation while also strengthening distribution capabilities.
- Adding incremental reclamation processing capacity to support the anticipated growth in reclamation volume from the ongoing phase out of HCFC (R-22) production and the future phase down of HFC production.
- Enabling Hudson to sell its state-of-the-art Global Energy Services offerings to a broader base of customers.
- Enhancing geographic footprint in the U.S.
- Combining two highly complementary businesses.
As of March 31, 2017, trailing 12 month pro forma revenue of the combined business is approximately $250 million. The transaction is expected to be accretive to earnings beginning one year following the close of the transaction.
The acquisition will be financed with available cash balances plus borrowings under an enhanced asset based lending facility of $150 million from PNC Bank and a new term loan from funds advised by FS Investments and sub-advised by GSO Capital Partners LP of between $95 million and $110 million. No additional Hudson equity will be issued to finance this transaction.
Kevin J. Zugibe, Chairman and Chief Executive Officer of Hudson Technologies commented, “This will be a transformative acquisition for our company, enhancing our business by providing a complementary product portfolio, expanding our geographic footprint and customer base and significantly expanding our sales and distribution capabilities. ARI is a prominent refrigerant distributor in the United States and we believe the combination of our operations will provide meaningful scale to our business and further enhance Hudson’s leadership in the refrigerant and reclamation industry.
“The increased scale of the combined company will allow us to better serve our customers during the ongoing phase out of HCFC refrigerants and positions us better to serve an expanded customer base during the future phase down of HFC refrigerants. Additionally, this acquisition gives us access to a significantly larger customer base and a new audience for our Global Energy Services offerings, a growing focus of our business which provide optimization solutions, engineering assessments and energy management tools.”
Mr. Zugibe continued, “With the acquisition of ARI, we look forward to leveraging our strengthened capabilities, expertise and reach to meet the needs of an expanded customer base. We look forward to serving our existing and acquired customers with our expanded portfolio of products and services.”
The acquisition of ARI is subject to customary closing conditions, including the consummation of the contemplated debt financing, and the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act, and is currently expected to close in 2017.
William Blair & Co. is acting as Hudson’s exclusive financial advisor for the transaction and the law firm of Wiggin and Dana LLP is serving as the Company’s legal counsel.
About Hudson Technologies
Hudson Technologies, Inc. is a leading provider of innovative solutions to recurring problems within the refrigeration industry. Hudson’s proprietary RefrigerantSide® Services increase operating efficiency and energy savings, and remove moisture, oils and other contaminants frequently found in the refrigeration circuits of large comfort cooling and process refrigeration systems. Performed at a customer’s site as an integral part of an effective scheduled maintenance program or in response to emergencies, RefrigerantSide® Services offer significant savings to customers due to their ability to be completed rapidly and at higher purity levels, and can be utilized while the customer’s system continues to operate. In addition, the Company sells refrigerants and provides traditional reclamation services to the commercial and industrial air conditioning and refrigeration markets. For further information on Hudson, please visit the Company’s web site at www.hudsontech.com.
Safe Harbor Statement under the Private Securities Litigation Act of 1995
Statements contained herein, which are not historical facts constitute 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 markets 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 which 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 and other risks detailed in the Company’s periodic reports filed 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 Belodeau
Institutional Marketing Services (IMS)
(203) 972-9200
jnesbett@institutionalms.com
Company Contact:
Brian F. Coleman, President & COO
Hudson Technologies, Inc.
(845) 735-6000
bcoleman@hudsontech.com
