Hudson Technologies, Inc. (NASDAQ:HDSN) announced results for the
first quarter ended March 31, 2018.
For the quarter ended March 31, 2018 Hudson
reported revenues of $42.4 million, a 9% increase compared to $38.8
million in the comparable 2017 period. Gross margin was 19%
for the first quarter of 2018 compared to 32% for the first quarter
of 2017. Net loss for the first quarter of 2018 was $3.1
million, or ($0.07) per basic and diluted share, compared to net
income of $5.7 million or $0.14 per basic and $0.13 per diluted
share in the first quarter of 2017. Non-GAAP adjusted net loss for
the quarter ended March 31, 2018 was $1.0 million, or ($0.02) per
diluted share, compared to non-GAAP adjusted net income of $6.1
million, or $0.14 per diluted share during the first quarter of
2017. Adjusted EBITDA was $2.9 million for the first quarter
of 2018, as compared to adjusted EBITDA of $10.5 million for the
first quarter of 2017.
Reconciliations of net income (loss) to non-GAAP
adjusted net income (loss), diluted net income (loss) per share to
non-GAAP adjusted diluted net income (loss) per share, and net
income (loss) to non-GAAP adjusted EBITDA, respectively, are
provided in the tables immediately following the consolidated
financial statements. Additional information about the Company’s
non-GAAP financial measures can be found under the caption “Use of
Non-GAAP Measures” below.
Kevin J. Zugibe, Chairman and Chief Executive
Officer of Hudson Technologies commented, “As we previously
indicated, the 2018 selling season has had a very slow start.
Our first quarter results were negatively impacted by declines in
both price and volume for most of the refrigerants we sell, with
many customers resorting to a just-in-time buying pattern for all
refrigerants, as opposed to the typical pre-season inventory
stocking in anticipation of the impending cooling season.
This just-in-time buying approach, combined with cooler than normal
weather and price declines contributed to our weaker performance
for both revenues and gross margins in the first quarter.
“The refrigerant season is a nine-month season
and we’ve only recently begun to see more seasonable weather, and
improved demand. However, we are concerned with the overall
pricing dynamics for all refrigerants, particularly in the near
term. With our visibility today, we do not expect to achieve
the revenue, gross margin or GAAP earnings per share targets set
forth in our fourth quarter earnings release. Assuming that
refrigerant pricing remains at current levels, GAAP gross margins
should remain in the upper teens in the near term. Overall,
we do believe that demand will return to more normal levels.
Consequently, primarily based on lower sales price expectations, we
are expecting revenues for the year to be approximately $230
million.”
Mr. Zugibe concluded, “Despite the current
market softness we remain optimistic about the long term market
opportunity. It should be noted that 2018 full year non-cash
expenses, net of anticipated capital expenditures and taxes, should
provide approximately $8 million of additional cash flow.
Moreover, we expect to generate approximately $10 million in
additional cash flow from the anticipated reduction in inventory
levels and approximately $9 million in additional cash flow from
the realization of a one-time cash tax benefit resulting from the
change in the tax law.
“We have experienced unsettled refrigerant
seasons in the past, but we anticipate that, as in these prior
seasons, refrigerant pricing will stabilize and, as such, we should
begin to see gross and operating margins returning to historical
levels. Our acquisition of ASPEN Refrigerants, Inc. (“ARI”)
provides a more diverse customer base that will give us added
flexibility to navigate the current refrigerant market and will
help to grow our supply of reclaimed refrigerants.
Our Company is a market leader in the refrigerant and
reclamation industry with a portfolio of products and service
offerings that leave us well positioned to capitalize on the
opportunities associated with the final virgin production phase out
of R-22 in 2019.”
Conference Call Information
The Company will host a conference call and
webcast to discuss the first quarter results today, May 9, 2018 at
5:00 P.M. Eastern Time.
To access the live webcast, log onto the Hudson
Technologies website at www.hudsontech.com, and click on “Investor
Relations.”
To participate in the call by phone, dial (877)
407-9205 approximately five minutes prior to the scheduled start
time. International callers please dial (201) 689-8054.
A replay of the teleconference will be available
until June 9, 2018 and may be accessed by dialing (877) 481-4010.
International callers may dial (919) 882-2331. Callers should
use conference ID: 27890.
About Hudson Technologies
Hudson Technologies, Inc. is a leading provider
of innovative and sustainable solutions for optimizing performance
and enhancing reliability of commercial and industrial chiller
plants and refrigeration systems. Hudson's proprietary
RefrigerantSide® Services increase operating efficiency, provide
energy and cost savings, reduce greenhouse gas emissions and the
plant’s carbon footprint while enhancing system life and
reliability of operations at the same time. RefrigerantSide®
Services can be performed at a customer's site as an integral part
of an effective scheduled maintenance program or in response to
emergencies. Hudson also offers SMARTenergy OPS®, which is a
cloud-based Managed Software as a Service for continuous
monitoring, Fault Detection and Diagnostics and real-time
optimization of chilled water plants. In addition, the Company
sells refrigerants and provides traditional reclamation services
for commercial and industrial air conditioning and refrigeration
uses. For further information on Hudson, please visit the Company's
web site at www.hudsontech.com.
Safe Harbor Statement under the Private Securities
Litigation Reform Act of 1995
Statements contained herein which are not
historical facts constitute forward-looking statements. These
include statements regarding management’s intentions, plans,
beliefs, expectations or forecasts for the future including,
without limitation, Hudson’s expectations with respect to the
benefits, costs and other anticipated financial impacts of the ARI
transaction; future financial and operating results of the Company;
and the Company’s plans, objectives, expectations and intentions
with respect to future operations and services. 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, 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 ARI’s
operations and any assets it acquires from other third parties into
its operations, and other risks detailed in the Company's 10-K for
the year ended December 31, 2017 and other subsequent filings with
the Securities and Exchange Commission. Examples of such risks and
uncertainties specific to the ARI transaction include, but are not
limited to, the possibility that the expected benefits will not be
realized, or will not be realized within the expected time period.
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.
Use of Non-GAAP Measures
The Company has presented the following non-GAAP
financial measures in this press release: EBITDA, Adjusted EBITDA,
Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share
(Adjusted EPS). The Company defines EBITDA as the net income (loss)
as reported under GAAP, plus income tax expense (benefit), interest
expense and depreciation and amortization expense. The Company
defines Adjusted EBITDA as EBITDA plus the amortization of the
inventory step-up in basis arising from inventory purchased in the
ARI acquisition, non-cash stock compensation expense, and
non-recurring transaction fees and integration costs related to the
ARI acquisition. The Company defines Adjusted Net Income
(Loss) as the net income (loss) as reported under GAAP plus income
tax expense (benefit), the amortization of the inventory step-up in
basis arising from inventory purchased in the ARI acquisition,
amortization expense, non-cash stock compensation expense, and
non-recurring transaction fees and integration costs related to the
ARI acquisition and adjusted for effective tax rates. The
Company defines Adjusted EPS as Adjusted Net Income (Loss) per
share.
We present these non-GAAP measures because we
believe these measures are useful indicators of our operating
performance, particularly in light of the impact of the recent ARI
acquisition. Our management believes that detail as to the impact
of the specified acquisition-related matters and other matters is
useful in understanding the overall change in the consolidated
results of operations for Hudson Technologies from one reporting
period to another. Our management uses these non-GAAP measures
principally as a measure of our operating performance and believes
that these measures are useful to investors because they are
frequently used by analysts, investors and other interested parties
to evaluate the operating performance of companies in our industry.
We also believe that these measures will be useful to our
management and investors during 2018 as the impact of the ARI
acquisition continues to be reflected in the Company’s financial
results.
Investor Relations Contact: John Nesbett/Jennifer
BelodeauInstitutional Marketing Services (IMS) (203)
972-9200jnesbett@institutionalms.com |
Company Contact: Brian F. Coleman, President &
COO Hudson Technologies, Inc. (845) 735-6000
bcoleman@hudsontech.com |
|
|
Hudson Technologies, Inc. and
SubsidiariesConsolidated Statements of
Operations(unaudited)(Amounts in
thousands, except for share and per share amounts)
|
|
Three-month period ended March
31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Revenues |
|
$ |
42,428 |
|
|
$ |
38,830 |
|
Cost of sales |
|
|
34,523 |
|
|
|
26,363 |
|
Gross profit |
|
|
7,905 |
|
|
|
12,467 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
8,077 |
|
|
|
2,952 |
|
Amortization |
|
|
742 |
|
|
|
122 |
|
Total operating expenses |
|
|
8,819 |
|
|
|
3,074 |
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
(914 |
) |
|
|
9,393 |
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(3,206 |
) |
|
|
(85 |
) |
Total other income (expense) |
|
|
(3,206 |
) |
|
|
(85 |
) |
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(4,120 |
) |
|
|
9,308 |
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense |
|
|
(1,064 |
) |
|
|
3,574 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(3,056 |
) |
|
$ |
5,734 |
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per common share – Basic |
|
$ |
(0.07 |
) |
|
$ |
0.14 |
|
Net
income (loss) per common share – Diluted |
|
$ |
(0.07 |
) |
|
$ |
0.13 |
|
Weighted average number of shares outstanding – Basic |
|
|
42,403,029 |
|
|
|
41,507,941 |
|
Weighted average number
of shares outstanding – Diluted |
|
|
42,403,029 |
|
|
|
43,503,889 |
|
|
|
|
|
|
|
|
|
|
Hudson Technologies, Inc. and
SubsidiariesConsolidated Balance
Sheets(Amounts in thousands, except for share and par
value amounts)
|
March 31, |
|
|
|
December 31, |
|
2018 |
|
|
|
2017 |
|
(unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
978 |
|
|
|
$ |
5,002 |
Trade
accounts receivable – net |
|
26,852 |
|
|
|
|
14,831 |
Inventories |
|
170,933 |
|
|
|
|
172,485 |
Income
tax receivable |
|
9,664 |
|
|
|
|
9,664 |
Prepaid
expenses and other current assets |
|
3,904 |
|
|
|
|
6,934 |
Total current assets |
|
212,331 |
|
|
|
|
208,916 |
|
|
|
|
|
|
|
|
Property, plant and
equipment, less accumulated depreciation |
|
29,655 |
|
|
|
|
30,461 |
|
|
|
|
|
|
|
|
Goodwill |
|
49,464 |
|
|
|
|
49,464 |
Intangible assets, less
accumulated amortization |
|
31,677 |
|
|
|
|
32,419 |
Other assets |
|
184 |
|
|
|
|
184 |
Total Assets |
$ |
323,311 |
|
|
|
$ |
321,444 |
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Trade
accounts payable |
$ |
29,248 |
|
|
|
$ |
10,885 |
Accrued
expenses and other current liabilities |
|
16,411 |
|
|
|
|
15,221 |
Accrued
payroll |
|
2,659 |
|
|
|
|
3,052 |
|
|
|
|
|
|
|
|
Current
maturities of long-term debt |
|
1,050 |
|
|
|
|
1,050 |
Short-term debt |
|
52,098 |
|
|
|
|
65,152 |
Total current
liabilities |
|
101,466 |
|
|
|
|
95,360 |
Deferred
tax liability |
|
410 |
|
|
|
|
1,473 |
Long-term
debt, less current maturities |
|
100,996 |
|
|
|
|
101,158 |
Total
Liabilities |
|
202,872 |
|
|
|
|
197,991 |
|
|
|
|
|
|
|
|
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; noneissued or outstanding |
|
— |
|
|
|
|
— |
Common
stock, $0.01 par value; shares authorized 100,000,000; issued and
outstanding42,403,140 and 42,398,140 |
|
424 |
|
|
|
|
424 |
Additional paid-in capital |
|
114,345 |
|
|
|
|
114,302 |
Retained
earnings |
|
5,670 |
|
|
|
|
8,727 |
Total
Stockholders' Equity |
|
120,439 |
|
|
|
|
123,453 |
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity |
$ |
323,311 |
|
|
|
$ |
321,444 |
|
|
|
|
|
|
|
|
Appendix – Non GAAP Reconciliations (unaudited)
Adjusted EBITDA |
Three Months EndedMarch
31, |
|
2018 |
|
|
2017 |
|
|
|
|
|
Net income
(loss) |
$ |
(3,056 |
) |
|
$ |
5,734 |
Income tax expense
(benefit) |
|
(1,064 |
) |
|
|
3,574 |
Interest expense |
|
3,206 |
|
|
|
85 |
Depreciation
expense |
|
1,012 |
|
|
|
483 |
Amortization
expense |
|
742 |
|
|
|
122 |
EBITDA |
|
840 |
|
|
|
9,998 |
Amortization of
inventory step-up in basis |
|
1,080 |
|
|
|
- |
Stock compensation
expense |
|
27 |
|
|
|
- |
Nonrecurring
expenses |
|
965 |
|
|
|
512 |
Adjusted EBITDA |
$ |
2,912 |
|
|
$ |
10,510 |
|
|
|
|
|
|
|
Adjusted Net Income (Loss) and Net Income (Loss) Per
Share |
Three Months EndedMarch
31, |
|
2018 |
|
|
2017 |
|
|
|
|
|
Net income
(loss) |
$ |
(3,056 |
) |
|
$ |
5,734 |
Income tax expense
(benefit) |
|
(1,064 |
) |
|
|
3,574 |
Pretax income
(loss) |
|
(4,120 |
) |
|
|
9,308 |
Amortization of
inventory step-up in basis |
|
1,080 |
|
|
|
- |
Amortization
expense |
|
742 |
|
|
|
122 |
Stock compensation
expense |
|
27 |
|
|
|
- |
Nonrecurring
expenses |
|
965 |
|
|
|
512 |
Adjusted pretax income (loss) |
|
(1,306 |
) |
|
|
9,942 |
Income tax expense
(benefit) |
|
(336 |
) |
|
|
3,818 |
Adjusted net income (loss) |
$ |
(970 |
) |
|
$ |
6,124 |
|
|
|
|
|
|
|
Net income
(loss) per share |
|
|
|
|
|
|
Diluted
net income (loss) per common share |
|
(0.07 |
) |
|
|
0.13 |
Adjustment to diluted net income (loss) per common share |
|
0.05 |
|
|
|
0.01 |
Adjusted
diluted net income (loss) per common share |
$ |
(0.02 |
) |
|
$ |
0.14 |
|
|
|
|
|
|
|
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