Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the
first quarter ended March 31, 2023.
For the quarter ended March 31, 2023, Hudson
reported revenues of $77.2 million, a decrease of 8% compared to
revenues of $84.3 million in the first quarter of 2022. The
decrease is primarily related to decreased selling prices for
certain refrigerants during the period as well as lower sales
volume in the quarter as compared to the first quarter of 2022.
Gross margin in the first quarter of 2023 was 39%, compared to 54%
in the first quarter of 2022. Hudson reported operating income of
$22.7 million in the first quarter of 2023, compared to operating
income of $38.3 million in the prior year period. The Company
recorded net income of $15.5 million or $0.34 per basic and $0.33
per diluted share in the first quarter of 2023, compared to net
income of $29.6 million or $0.66 per basic and $0.63 diluted share
in the same period of 2022. 2023 and future periods will reflect a
statutory tax rate of approximately 26%, excluding certain
temporary and permanent tax adjustments, while the 2022 period
reflects a very low effective tax rate due to the use of then
existing NOL carryforwards.
Hudson reduced total outstanding debt from $46.8
million at December 31, 2022 to $43.6 million at March 31, 2023.
Stockholders’ equity improved to $191.5 million at March 31, 2023
as compared to $174.9 million at December 31,
2022.
Brian F. Coleman, President and Chief Executive
Officer of Hudson Technologies commented, “As we move through the
2023 selling season, we are focused on continuing to drive the
momentum we’ve built over the past eighteen months. As anticipated,
we faced a tough comparison to the extraordinary gross margin
performance during the 2022 selling season, and our first quarter
2023 results reflected this dynamic. During the first quarter of
last year, we saw significant sales price increases without a
corresponding increase in inventory price, which resulted in
unsustainably high gross margin. First quarter 2023 gross margin
moderated as expected compared to the first quarter of 2022, but
still came in ahead of our long-range target gross margin of 35%.
Additionally, we achieved strong profitability and generated cash
flow from operations that was two times greater than cash flow
generated in the first quarter of 2022. As the selling season gets
underway in earnest, we are confident that our leadership position
in the industry, operational excellence, proven distribution
network and longstanding customer relationships position us well to
drive continued strong performance.
“From a regulatory perspective, for 2023 a 10%
stepdown in virgin HFC production and consumption allowances
mandated by the AIM Act remains in place. In 2024, a 40% baseline
reduction in HFCs will begin, and as we’ve previously stated, we
believe the current phasedown schedule will benefit our business by
driving higher demand for our reclaimed refrigerants as virgin HFCs
become constrained. Longer term, we see a tremendous opportunity
for the increased use of reclaimed refrigerants as industry
stakeholders embrace the environmental benefits of using greener
refrigeration technology and equipment, and as federal and state
legislation increasingly mandates the use of recovered and
reclaimed refrigerants.
“With our industry-leading reclamation
technology and decades of experience, Hudson is ideally positioned
to provide sustainable and responsible refrigerant management to
support the industry transition to greener refrigerant and cooling
equipment utilizing lower global warming potential refrigerants. We
are energized by the opportunity to meet the refrigerant needs of
the growing installed base of cooling and refrigeration systems as
well as providing conversion and servicing options as equipment
requirements evolve,” Mr. Coleman concluded.
Conference Call Information
The Company will host a conference call and
webcast to discuss the first quarter results today, May 3, 2023 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 (888)
506-0062 approximately five minutes prior to the scheduled start
time. International callers please dial (973) 528-0011. Callers
should use entry code: 448742
A replay of the teleconference will be available
until June 2, 2023 and may be accessed by dialing (877) 481-4010.
International callers may dial (919) 882-2331. Callers should use
conference ID: 48107.
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 existing credit facilities, 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, the impact of the current COVID-19 pandemic, and other
risks detailed in the Company's 10-K for the year ended December
31, 2022 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: |
Company Contact: |
John Nesbett/Jennifer Belodeau |
Brian F. Coleman, President &
CEO |
IMS Investor Relations |
Hudson Technologies, Inc. |
(203) 972-9200 |
(845) 735-6000 |
jnesbett@institutionalms.com |
bcoleman@hudsontech.com |
Hudson Technologies, Inc. and
Subsidiaries |
Consolidated Balance Sheets |
(unaudited) |
(Amounts in thousands, except for share and per share amounts) |
|
|
March 31, |
|
December 31, |
|
|
2023 |
|
2022 |
|
|
(unaudited) |
|
|
|
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
12,322 |
|
$ |
5,295 |
Trade accounts receivable – net |
|
|
38,764 |
|
|
20,872 |
Inventories |
|
|
137,007 |
|
|
145,377 |
Prepaid expenses and other current assets |
|
|
6,726 |
|
|
5,289 |
Total current
assets |
|
|
194,819 |
|
|
176,833 |
|
|
|
|
|
|
|
Property, plant and equipment,
less accumulated depreciation |
|
|
20,229 |
|
|
20,568 |
Goodwill |
|
|
47,803 |
|
|
47,803 |
Intangible assets, less
accumulated amortization |
|
|
16,866 |
|
|
17,564 |
Right of use asset |
|
|
7,713 |
|
|
7,339 |
Other assets |
|
|
2,387 |
|
|
2,386 |
Total
Assets |
|
$ |
289,817 |
|
$ |
272,493 |
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Trade accounts payable |
|
$ |
15,156 |
|
$ |
14,165 |
Accrued expenses and other current liabilities |
|
|
32,716 |
|
|
27,908 |
Accrued payroll |
|
|
2,599 |
|
|
6,303 |
Current maturities of long-term debt |
|
|
4,250 |
|
|
4,250 |
Total current
liabilities |
|
|
54,721 |
|
|
52,626 |
Deferred tax liability |
|
|
1,601 |
|
|
244 |
Long-term lease liabilities |
|
|
6,062 |
|
|
5,763 |
Long-term debt, less current maturities, net of deferred financing
costs |
|
|
35,934 |
|
|
38,985 |
Total
Liabilities |
|
|
98,318 |
|
|
97,618 |
|
|
|
|
|
|
|
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 45,328,892 and 45,287,619, respectively |
|
|
453 |
|
|
453 |
Additional paid-in capital |
|
|
117,535 |
|
|
116,442 |
Accumulated retained earnings |
|
|
73,511 |
|
|
57,980 |
Total Stockholders’
Equity |
|
|
191,499 |
|
|
174,875 |
|
|
|
|
|
|
|
Total Liabilities and
Stockholders’ Equity |
|
$ |
289,817 |
|
$ |
272,493 |
Hudson Technologies, Inc. and
Subsidiaries |
Consolidated Income Statements |
(unaudited) |
|
(Amounts in thousands, except for share and per share amounts) |
|
|
Three-month period |
|
|
ended March 31, |
|
|
2023 |
|
2022 |
Revenues |
|
$ |
77,199 |
|
$ |
84,338 |
Cost of
sales |
|
|
46,869 |
|
|
38,518 |
Gross
profit |
|
|
30,330 |
|
|
45,820 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
Selling, general and administrative |
|
|
6,977 |
|
|
6,824 |
Amortization |
|
|
698 |
|
|
698 |
Total operating expenses |
|
|
7,675 |
|
|
7,522 |
|
|
|
|
|
|
|
Operating
income |
|
|
22,655 |
|
|
38,298 |
|
|
|
|
|
|
|
Interest
expense |
|
|
1,849 |
|
|
7,305 |
|
|
|
|
|
|
|
Income before income
taxes |
|
|
20,806 |
|
|
30,993 |
|
|
|
|
|
|
|
Income tax
expense |
|
|
5,275 |
|
|
1,438 |
|
|
|
|
|
|
|
Net
income |
|
$ |
15,531 |
|
$ |
29,555 |
|
|
|
|
|
|
|
Net income per common share –
Basic |
|
$ |
0.34 |
|
$ |
0.66 |
Net income per common share –
Diluted |
|
$ |
0.33 |
|
$ |
0.63 |
Weighted average number of
shares outstanding – Basic |
|
|
45,298,514 |
|
|
44,779,822 |
Weighted average number of
shares outstanding – Diluted |
|
|
47,311,027 |
|
|
46,736,471 |
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