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.”
Conference Call Information
The Company will host a conference call and webcast
to discuss the fourth quarter results today, March 4, 2020 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 April 4, 2020 and may be accessed by dialing (877) 481-4010.
International callers may dial (919) 882-2331. Callers should
use conference ID: 33437.
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;
the Company’s ability to remain in compliance with the financial
covenants in its credit agreements; 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, 2018 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.
Company Contact:Brian F. Coleman,
President & COOHudson Technologies, Inc.(845)
735-6000bcoleman@hudsontech.com
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Hudson Technologies, Inc. and
SubsidiariesConsolidated Balance
Sheets(Unaudited)(Amounts in thousands,
except for share and par value amounts) |
|
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December 31, |
|
|
|
2019 |
|
|
2018 |
|
Assets |
|
|
|
|
|
|
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Current
assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,600 |
|
|
$ |
2,272 |
|
Trade accounts receivable – net |
|
|
8,061 |
|
|
|
14,065 |
|
Inventories |
|
|
59,238 |
|
|
|
101,962 |
|
Prepaid expenses and other current assets |
|
|
4,525 |
|
|
|
5,287 |
|
Total current assets |
|
|
74,424 |
|
|
|
123,586 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment,
less accumulated depreciation |
|
|
23,674 |
|
|
|
27,395 |
|
Goodwill |
|
|
47,803 |
|
|
|
47,803 |
|
Intangible assets, less
accumulated amortization |
|
|
26,012 |
|
|
|
29,451 |
|
Right of use asset |
|
|
8,048 |
|
|
|
— |
|
Other assets |
|
|
192 |
|
|
|
106 |
|
Total Assets |
|
$ |
180,153 |
|
|
$ |
228,341 |
|
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|
|
|
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|
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Liabilities and
Stockholders' Equity |
|
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|
|
|
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Current
liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
10,274 |
|
|
$ |
8,671 |
|
Accrued expenses and other current liabilities |
|
|
18,120 |
|
|
|
19,023 |
|
Accrued payroll |
|
|
724 |
|
|
|
1,046 |
|
Current maturities of long-term debt |
|
|
3,008 |
|
|
|
2,672 |
|
Short-term debt |
|
|
14,000 |
|
|
|
29,000 |
|
Total current liabilities |
|
|
46,126 |
|
|
|
60,412 |
|
Deferred tax liability |
|
|
1,192 |
|
|
|
443 |
|
Long-term lease
liabilities |
|
|
5,742 |
|
|
|
— |
|
Long-term debt, less current
maturities, net of deferred financing costs |
|
|
81,982 |
|
|
|
98,273 |
|
Total Liabilities |
|
|
135,042 |
|
|
|
159,128 |
|
|
|
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|
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|
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Commitments and
contingencies |
|
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Stockholders'
equity: |
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Preferred stock, shares authorized 5,000,000: Series A Convertible
preferred stock, |
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$0.01 par value ($100 liquidation preference value); shares
authorized 150,000; none issued or outstanding |
|
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— |
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— |
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Common stock, $0.01 par value; shares authorized 100,000,000;
issued and |
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|
|
|
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outstanding: 42,628,560 and 42,602,431, respectively |
|
|
426 |
|
|
|
426 |
|
Additional paid-in capital |
|
|
117,557 |
|
|
|
115,719 |
|
Accumulated deficit |
|
|
(72,872 |
) |
|
|
(46,932 |
) |
Total Stockholders' Equity |
|
|
45,111 |
|
|
|
69,213 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity |
|
$ |
180,153 |
|
|
$ |
228,341 |
|
|
|
|
|
|
|
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Hudson Technologies, Inc. and
SubsidiariesConsolidated Statements of
Operations(unaudited)(Amounts in
thousands, except for share and per share amounts) |
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Three months ended December 31, |
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Twelve months ended December 31, |
|
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2019 |
|
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2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
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|
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|
|
|
|
|
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|
Revenues |
|
$ |
25,753 |
|
|
$ |
25,721 |
|
|
$ |
162,059 |
|
|
$ |
166,525 |
|
Cost of
sales |
|
|
20,989 |
|
|
|
22,638 |
|
|
|
144,894 |
|
|
|
173,890 |
|
Gross profit
(loss) |
|
|
4,764 |
|
|
|
3,083 |
|
|
|
17,165 |
|
|
|
(7,365 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
8,864 |
|
|
|
6,232 |
|
|
|
30,018 |
|
|
|
32,270 |
|
Amortization |
|
|
715 |
|
|
|
748 |
|
|
|
2,931 |
|
|
|
2,973 |
|
Total operating expenses |
|
|
9,579 |
|
|
|
6,980 |
|
|
|
32,949 |
|
|
|
35,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss |
|
|
(4,815 |
) |
|
|
(3,897 |
) |
|
|
(15,784 |
) |
|
|
(42,608 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(5,990 |
) |
|
|
(4,139 |
|
|
|
(18,911 |
) |
|
|
(14,755 |
) |
Other income (expense) |
|
|
(1 |
) |
|
|
— |
|
|
|
9,411 |
|
|
|
— |
|
Total other expense |
|
|
(5,991 |
) |
|
|
(4,139 |
|
|
|
(9,500 |
) |
|
|
(14,755 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes |
|
|
(10,806 |
) |
|
|
(8,036 |
) |
|
|
(25,284 |
) |
|
|
(57,363 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit) |
|
|
(35 |
|
|
|
71 |
|
|
|
656 |
|
|
|
(1,704 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(10,771 |
) |
|
$ |
(8,107 |
) |
|
$ |
(25,940 |
) |
|
$ |
(55,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share – Basic |
|
$ |
(0.25 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.61 |
) |
|
$ |
(1.31 |
) |
Net loss per common share – Diluted |
|
$ |
(0.25 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.61 |
) |
|
$ |
(1.31 |
) |
Weighted average number of shares outstanding – Basic |
|
|
42,628,560 |
|
|
|
42,600,898 |
|
|
|
42,613,478 |
|
|
|
42,484,972 |
|
Weighted average number of shares outstanding – Diluted |
|
|
42,628,560 |
|
|
|
42,600,898 |
|
|
|
42,613,478 |
|
|
|
42,484,972 |
|
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