Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the
third quarter and nine months ended September 30, 2024.
Brian F. Coleman, President and Chief Executive
Officer of Hudson Technologies commented, “Our third quarter
results reflected continued pricing pressure that persisted for
certain refrigerants throughout the 2024 cooling season. While
disappointing in the near term, pricing trends are only one element
of our business model and we remain confident in our long-term
growth strategy to capitalize on the phasedown of HFC refrigerants
and the expected corresponding growth in demand for reclaimed
refrigerants. With our current visibility, we are adjusting our
expectation for full year 2024 revenue, which we anticipate will be
at the low end of the guidance range we previously provided, with
full year gross margin of approximately 28%.
“The EPA recently finalized the Refrigerant
Management rule pursuant to subsection (H) of the AIM Act,
providing reclaim mandates for use in servicing certain sectors of
the market beginning in 2029, and we view this as a positive step
in the industry’s transition to the broader use of reclaimed
refrigerants. Throughout our many decades in the refrigerant
industry we have remained focused on the elements of our business
we can control: ensuring that our customers have reliable supply of
the refrigerants they need and promoting recovery and reclamation
activities to enable the ongoing evolution to more efficient
equipment and sustainable refrigerant management practices.
“Our unlevered balance sheet strengthened during
the quarter with no debt and $56.5 million in cash at September 30,
2024. Additionally, during the quarter, as part of our capital
allocation strategy, we repurchased $2.6 million of common stock
under our recently established stock buyback plan,” Mr. Coleman
concluded.
Three Months Results
For the quarter ended September 30, 2024, Hudson
reported:
- Revenues of $61.9 million, a
decrease of 19% compared to revenues of $76.5 million in the
comparable 2023 period. The decrease is primarily related to
decreased prices for certain refrigerants, as well as slightly
lower revenue from the Company’s DLA contract in the quarter
compared to the third quarter of 2023.
- Gross margin of 26%, compared to
40% in the third quarter of 2023.
- Selling, general and administrative
expenses increased to $8.1 million compared to $6.8 million in the
third quarter of 2023, primarily related to higher personnel costs
and professional fees.
- Operating income of $7.0 million,
compared to operating income of $23.1 million in the prior year
period.
- Net income of $7.8 million or $0.17
per basic and diluted share in the third quarter of 2024, compared
to net income of $13.6 million or $0.30 per basic and $0.29 per
diluted share in the same period of 2023. Of note, net income for
the third quarter of 2024 included approximately $2.3 million of
non-recurring income, arising in part from proceeds of a litigation
settlement.
Nine Months Results
For the nine months ended September 30, 2024,
Hudson reported:
- Revenues of $202.5 million, a
decrease of 17% compared to revenues of $244.2 million for the
first nine months of 2023. Revenues declined primarily due to
decreased selling prices for certain refrigerants as well as lower
revenue from the Company’s DLA contract.
- Gross margin of 30%, compared to
gross margin of 40% in the first nine months of 2023.
- Selling, general and administrative
expenses increased to $25.0 million compared to $22.0 million in
the first nine months of 2023. Included in the year to date, 2024
selling, general and administrative expenses are approximately $0.7
million of non-recurring costs associated with the USA acquisition
and IT expenses.
- Operating income of $32.5 million
compared to operating income of $73.4 million in the first nine
months of 2023.
- Net income of $27.0 million or
$0.59 per basic and $0.57 per diluted share, compared to net income
of $48.3 million or $1.07 per basic and $1.02 per diluted share in
the first nine months of 2023. Net income in the first nine months
included approximately $2.3 million of non-recurring income,
arising in part from proceeds of a litigation settlement as
mentioned above.
The Company announced the establishment of a
stock repurchase program during the third quarter of 2024, under
which it repurchased $2.6 million of common stock. Additionally,
subsequent to the close of the quarter, on October 25, 2024 Hudson
announced that its board of directors approved an increase to the
Company’s share repurchase program. Hudson may now purchase up to
$20 million in shares of its common stock, consisting of up to $10
million in shares during each of calendar year 2024 and 2025. The
Company had previously announced that its board had authorized the
repurchase of $10 million of outstanding common stock during 2024
and 2025.
Conference Call Information
The Company will host a conference call and
webcast to discuss the third quarter results today, November 4,
2024, at 5:00 P.M. Eastern Time.
Advance registration for the call is required.
Please visit this link by 4:30 p.m. Eastern Time today, Monday,
November 4, 2024 to register and receive dial-in and webcast
details.
A replay of the teleconference will be available
until December 4, 2024, and may be accessed by dialing (877)
481-4010. International callers may dial (919) 882-2331. Callers
should use conference ID: 51297.
About Hudson Technologies
Hudson Technologies, Inc. is a leading provider
of innovative and sustainable refrigerant products and services to
the Heating Ventilation Air Conditioning and Refrigeration
industry. For nearly three decades, we have demonstrated our
commitment to our customers and the environment by becoming one of
the first in the United States and largest refrigerant reclaimers
through multimillion dollar investments in the plants and advanced
separation technology required to recover a wide variety of
refrigerants and restoring them to Air-Conditioning, Heating, and
Refrigeration Institute standard for reuse as certified EMERALD
Refrigerants™. The Company's products and services are primarily
used in commercial air conditioning, industrial processing and
refrigeration systems, and include refrigerant and industrial gas
sales, refrigerant management services consisting primarily of
reclamation of refrigerants and RefrigerantSide® Services performed
at a customer's site, consisting of system decontamination to
remove moisture, oils and other contaminants. The Company’s
SmartEnergy OPS® service is a web-based real time continuous
monitoring service applicable to a facility’s refrigeration systems
and other energy systems. The Company’s Chiller Chemistry® and
Chill Smart® services are also predictive and diagnostic service
offerings. As a component of the Company’s products and services,
the Company also generates carbon offset projects.
Safe Harbor Statement under the Private Securities
Litigation Reform Act of 1995
Statements contained herein which are not
historical facts constitute forward-looking statements. Such
forward-looking statements involve a number of known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, but are not limited to,
changes in the laws and regulations affecting the industry, changes
in the demand and price for refrigerants (including unfavorable
market conditions adversely affecting the demand for, and the price
of, refrigerants), the Company's ability to source refrigerants,
regulatory and economic factors, seasonality, competition,
litigation, the nature of supplier or customer arrangements that
become available to the Company in the future, adverse weather
conditions, possible technological obsolescence of existing
products and services, possible reduction in the carrying value of
long-lived assets, estimates of the useful life of its assets,
potential environmental liability, customer concentration, the
ability to obtain financing, the ability to meet financial
covenants under its existing credit facility, any delays or
interruptions in bringing products and services to market, the
timely availability of any requisite permits and authorizations
from governmental entities and third parties as well as factors
relating to doing business outside the United States, including
changes in the laws, regulations, policies, and political,
financial and economic conditions, including inflation, interest
and currency exchange rates, of countries in which the Company may
seek to conduct business, the Company’s ability to successfully
integrate any assets it acquires from third parties into its
operations, and other risks detailed in the Company's 10-K for the
year ended December 31, 2023 and other subsequent filings with the
Securities and Exchange Commission. The words "believe",
"expect", "anticipate", "may", "plan", "should" and similar
expressions identify forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date the statement was
made.
|
Investor Relations Contact:John Nesbett/Jennifer
BelodeauIMS Investor Relations (203)
972-9200jnesbett@imsinvestorrelations.com |
|
Company Contact:Brian F. Coleman, President &
CEOHudson Technologies, Inc.(845)
735-6000bcoleman@hudsontech.com |
|
|
|
|
|
Hudson Technologies, Inc. and
SubsidiariesConsolidated Balance
Sheets(Amounts in thousands, except for share and par
value amounts) |
| |
| |
September 30, |
|
December 31, |
| |
2024 |
|
2023 |
| |
(unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
| Current
assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
56,487 |
|
|
$ |
12,446 |
|
|
Trade accounts receivable – net |
|
28,547 |
|
|
|
25,169 |
|
|
Inventories |
|
103,523 |
|
|
|
154,450 |
|
|
Income tax receivable |
|
3,645 |
|
|
|
5,438 |
|
|
Prepaid expenses and other current assets |
|
11,308 |
|
|
|
7,492 |
|
|
Total current assets |
|
203,510 |
|
|
|
204,995 |
|
| |
|
|
|
|
|
|
|
| Property, plant and equipment,
less accumulated depreciation |
|
20,075 |
|
|
|
19,375 |
|
| Goodwill |
|
62,420 |
|
|
|
47,803 |
|
| Intangible assets, less
accumulated amortization |
|
14,982 |
|
|
|
14,771 |
|
| Right of use asset |
|
5,217 |
|
|
|
6,591 |
|
| Other assets |
|
3,224 |
|
|
|
3,137 |
|
|
Total Assets |
$ |
309,428 |
|
|
$ |
296,672 |
|
| |
|
|
|
|
|
|
|
| Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
| Current
liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
$ |
11,060 |
|
|
$ |
23,399 |
|
|
Accrued expenses and other current liabilities |
|
31,595 |
|
|
|
31,537 |
|
|
Accrued payroll |
|
3,908 |
|
|
|
3,615 |
|
|
Total current liabilities |
|
46,563 |
|
|
|
58,551 |
|
|
Deferred tax liability |
|
3,538 |
|
|
|
4,558 |
|
|
Long-term lease liabilities |
|
3,832 |
|
|
|
4,790 |
|
|
Other long-term liabilities |
|
1,600 |
|
|
|
— |
|
|
Total Liabilities |
|
55,533 |
|
|
|
67,899 |
|
| |
|
|
|
|
|
|
|
| Commitments and
contingencies |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Stockholders’
equity: |
|
|
|
|
|
|
|
|
Preferred stock, shares authorized 5,000,000: Series A Convertible
preferred stock, $0.01 par value ($100 liquidation preference
value); shares authorized 150,000; none issued or outstanding |
|
— |
|
|
|
— |
|
|
Common stock, $0.01 par value; shares authorized 100,000,000;
issued and outstanding: 45,198,507 and 45,502,380,
respectively |
|
452 |
|
|
|
455 |
|
|
Additional paid-in capital |
|
116,263 |
|
|
|
118,091 |
|
|
Retained earnings |
|
137,180 |
|
|
|
110,227 |
|
|
Total Stockholders’ Equity |
|
253,895 |
|
|
|
228,773 |
|
| |
|
|
|
|
|
|
|
| Total Liabilities and
Stockholders’ Equity |
$ |
309,428 |
|
|
$ |
296,672 |
|
|
|
|
|
|
|
|
|
|
|
Hudson Technologies, Inc. and
SubsidiariesConsolidated Statements of
Income(unaudited)(Amounts in thousands,
except for share and per share amounts) |
| |
| |
Three months |
|
Nine months |
| |
ended September 30, |
|
ended September 30, |
| |
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Revenues |
$ |
61,943 |
|
|
$ |
76,496 |
|
|
$ |
202,475 |
|
|
$ |
244,169 |
|
| Cost of
sales |
|
46,001 |
|
|
|
45,916 |
|
|
|
142,541 |
|
|
|
146,632 |
|
| Gross
profit |
|
15,942 |
|
|
|
30,580 |
|
|
|
59,934 |
|
|
|
97,537 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
8,059 |
|
|
|
6,760 |
|
|
|
25,019 |
|
|
|
22,010 |
|
|
Amortization |
|
910 |
|
|
|
698 |
|
|
|
2,368 |
|
|
|
2,095 |
|
|
Total operating expenses |
|
8,969 |
|
|
|
7,458 |
|
|
|
27,387 |
|
|
|
24,105 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
income |
|
6,973 |
|
|
|
23,122 |
|
|
|
32,547 |
|
|
|
73,432 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other (income)
expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense (income) |
|
(315 |
) |
|
|
4,358 |
|
|
|
51 |
|
|
|
8,106 |
|
| Other income |
|
(2,250 |
) |
|
|
— |
|
|
|
(2,250 |
) |
|
|
— |
|
| Total other (income)
expense |
|
(2,565 |
) |
|
|
4,358 |
|
|
|
(2,199 |
) |
|
|
8,106 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income before income
taxes |
|
9,538 |
|
|
|
18,764 |
|
|
|
34,746 |
|
|
|
65,326 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax
expense |
|
1,732 |
|
|
|
5,182 |
|
|
|
7,793 |
|
|
|
17,024 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net
income |
$ |
7,806 |
|
|
$ |
13,582 |
|
|
$ |
26,953 |
|
|
$ |
48,302 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income per common share –
Basic |
$ |
0.17 |
|
|
$ |
0.30 |
|
|
$ |
0.59 |
|
|
$ |
1.07 |
|
| Net income per common share –
Diluted |
$ |
0.17 |
|
|
$ |
0.29 |
|
|
$ |
0.57 |
|
|
$ |
1.02 |
|
| Weighted average number of
shares outstanding – Basic |
|
45,435,458 |
|
|
|
45,404,963 |
|
|
|
45,486,263 |
|
|
|
45,348,072 |
|
| Weighted average number of
shares outstanding – Diluted |
|
47,135,443 |
|
|
|
47,345,380 |
|
|
|
47,278,638 |
|
|
|
47,319,464 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson Technologies, Inc. and
SubsidiariesConsolidated Statements of Cash
Flows(unaudited)(Amounts in
thousands) |
| |
| |
Nine month-period |
| |
ended September 30, |
| |
2024 |
|
2023 |
| Cash flows from
operating activities: |
|
|
|
|
|
|
Net income |
$ |
26,953 |
|
|
$ |
48,302 |
|
| Adjustments to reconcile net
income to cash provided by operating activities: |
|
|
|
|
|
|
Depreciation |
|
2,274 |
|
|
|
2,213 |
|
|
Amortization of intangible assets |
|
2,368 |
|
|
|
2,095 |
|
|
Impairment of long lived assets |
|
441 |
|
|
|
— |
|
|
Lower of cost or net realizable value inventory adjustment |
|
3,811 |
|
|
|
(2,195 |
) |
|
Allowance for credit losses |
|
14 |
|
|
|
800 |
|
|
Share based compensation |
|
808 |
|
|
|
2,061 |
|
|
Amortization of deferred finance costs |
|
171 |
|
|
|
669 |
|
|
Loss on extinguishment of debt |
|
— |
|
|
|
3,427 |
|
|
Deferred tax expense |
|
(1,020 |
) |
|
|
4,280 |
|
| Changes in assets and
liabilities: |
|
|
|
|
|
|
Trade accounts receivable |
|
(733 |
) |
|
|
(24,863 |
) |
|
Inventories |
|
52,189 |
|
|
|
8,341 |
|
|
Prepaid and other assets |
|
(6,732 |
) |
|
|
(684 |
) |
|
Lease obligations |
|
(6 |
) |
|
|
1 |
|
|
Income taxes receivable |
|
1,794 |
|
|
|
(4,212 |
) |
|
Accounts payable and accrued expenses |
|
(11,229 |
) |
|
|
3,283 |
|
|
Cash provided by operating activities |
|
71,103 |
|
|
|
43,518 |
|
| |
|
|
|
|
|
| Cash flows from
investing activities: |
|
|
|
|
|
| Payments for acquisition |
|
(20,670 |
) |
|
|
— |
|
| Additions to property, plant,
and equipment |
|
(3,752 |
) |
|
|
(2,215 |
) |
|
Cash used in investing activities |
|
(24,422 |
) |
|
|
(2,215 |
) |
| |
|
|
|
|
|
| Cash flows from
financing activities: |
|
|
|
|
|
| Proceeds from issuance of
common stock |
|
— |
|
|
|
39 |
|
| Repurchase of common
shares |
|
(2,636 |
) |
|
|
— |
|
| Excess tax benefits from
exercise of stock options |
|
(4 |
) |
|
|
(693 |
) |
| Borrowing of short-term debt -
net |
|
— |
|
|
|
5,000 |
|
| Repayment of long-term
debt |
|
— |
|
|
|
(47,161 |
) |
|
Cash used in financing activities |
|
(2,640 |
) |
|
|
(42,815 |
) |
| |
|
|
|
|
|
| Increase (decrease) in cash
and cash equivalents |
|
44,041 |
|
|
|
(1,512 |
) |
| Cash and cash equivalents at
beginning of period |
|
12,446 |
|
|
|
5,295 |
|
|
Cash and cash equivalents at end of period |
$ |
56,487 |
|
|
$ |
3,783 |
|
| |
|
|
|
|
|
| Supplemental
disclosure of cash flow information: |
|
|
|
|
|
| Cash paid for interest |
$ |
529 |
|
|
$ |
4,232 |
|
| |
|
|
|
|
|
| Cash paid for income taxes –
net |
$ |
7,042 |
|
|
$ |
16,955 |
|
| |
|
|
|
|
|
|
|
Hudson Technologies (NASDAQ:HDSN)
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Hudson Technologies (NASDAQ:HDSN)
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