Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the
third quarter and nine months ended September 30, 2018.
For the quarter ended September 30, 2018 Hudson
reported revenues of $40.5 million, an increase of 64% compared to
$24.7 million in the comparable 2017 period. Revenues for the
2018 period included revenues from Aspen Refrigerants, Inc. (“ARI”)
which was acquired in October 2017. Excluding the impact of
ARI, revenues for the quarter ended September 30, 2018 decreased by
$5.8 million from the comparable quarter in 2017. This
decline was attributable to a decrease in the selling price per
pound of certain refrigerants sold, which accounted for a decrease
in revenues of $2.3 million and a decrease in the number of pounds
of certain refrigerants sold, which accounted for a decrease in
revenues of $3.5 million. The Company recorded a net loss of
$13.9 million or ($0.33) per basic and diluted share in the third
quarter of 2018, as compared to net income of $2.1 million or $0.05
per basic and diluted share in the same period of 2017.
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.
Non-GAAP adjusted net loss for the quarter ended September 30, 2018
was ($0.5) million, or ($0.01) per diluted share, compared to
non-GAAP adjusted net income of $3.8 million, or $0.09 per diluted
share during the third quarter of 2017. Adjusted EBITDA was
$5.0 million for the third quarter of 2018, as compared to adjusted
EBITDA of $3.0 million for the third quarter of 2017.
For the nine months ended September 30, 2018,
Hudson reported revenues of $140.8 million, an increase of 22%
compared to $115.8 million in the comparable 2017 period.
Revenues for the 2018 period included revenues from ARI.
Excluding the impact of ARI, revenues for the first nine
months of 2018 decreased by $44 million from the comparable 2017
period. The decline was attributable to a decrease in the selling
price per pound of certain refrigerants sold, which accounted for a
decrease in revenues of $29 million and a decrease in the number of
pounds of certain refrigerants sold, which accounted for a decrease
in revenues of $15 million. The Company experienced negative
gross margins for the first nine months of 2018 compared to gross
margin of 30% in the first nine months of 2017. The Company’s
net loss for the first nine months of 2018 was $47.6 million, or
($1.12) per basic and diluted share, which included a non-cash
inventory write down of approximately $35 million, an approximately
$9 million non-cash tax effect for reserve allowance, and
approximately $6 million in non-recurring charges related to the
acquisition and integration of ARI, as compared to net income of
$16.4 million or $0.39 per basic and $0.38 per diluted share in the
first nine months of 2017. Non-GAAP adjusted net loss for the
nine months ended September 30, 2018, which excludes any inventory
write downs, was ($1.1) million, or ($0.03) per diluted share,
compared to non-GAAP adjusted net income of $18.2 million, or $0.42
per diluted share during the first nine months of 2017.
Adjusted EBITDA was $12.6 million for the first nine months of
2018, as compared to adjusted EBITDA of $28.9 million for the first
nine months 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
statement of operations. Additional information about the Company’s
non-GAAP financial measures can be found under the caption “Use of
Non-GAAP Measures” below.
Following the close of the quarter, Hudson
announced that it has entered into definitive amendments to its
term loan and revolving loan credit facilities. These
amendments have been implemented pursuant to a Waiver and Third
Amendment to its Term Loan Credit and Security Agreement (the
“Third Amendment”), as well as a Second Amendment to its Amended
and Restated Revolving Credit and Security Agreement (the “Second
Revolver Amendment”). Additionally, on November 30, 2018 the
Company filed its Form 10-Q for the period ended June 30, 2018,
together with its Form 10-Q for the period ended September 30,
2018. With those filings, the Company has regained compliance with
the periodic filing requirement of the Nasdaq Stock Market.
Kevin J. Zugibe, Chairman and Chief Executive
Officer of Hudson Technologies commented, “We were pleased to
announce definitive amendments to our credit facilities, which we
believe provide us with the financial flexibility and liquidity to
drive improved operating performance moving forward. Despite
a selling season characterized by just-in-time buying patterns,
diminished pricing of most refrigerants and seasonably cooler
temperatures, we achieved $35 million in cash flow from operations
during the first nine months of 2018, compared to $12.1 million for
the comparable period in 2017. Additionally, we’ve reduced
our debt by $37 million year-to-date and had approximately $45
million of availability as of September 30, 2018.
“The 2018 selling season was one of the most
challenging for the industry and our company. The severe
price corrections across nearly all refrigerants were
unprecedented. That said, with our visibility today, we
believe that pricing has stabilized and our margins should improve
as we replace the higher priced inventory with lower priced
product. Likewise, operationally we are better prepared to
more effectively address just-in-time buying patterns, should that
pattern continue in 2019.”
Mr. Zugibe concluded, “Our acquisition of ARI
has enhanced our customer base and product offerings, giving us
added flexibility to navigate the current refrigerant market.
With our solid, longstanding customer base, more diverse product
portfolio and expanded distribution network, we remain optimistic
about the market opportunity ahead. As we move forward, we
remain focused on strengthening our leadership position in the
refrigerant and reclamation industry.”
Conference Call Information
The Company will host a conference call and
webcast to discuss the third quarter results today, December 5,
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 January 5, 2019 and may be accessed by dialing (877)
481-4010. International callers may dial (919) 882-2331.
Callers should use conference ID: 41503.
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 secure an amendment to the Term Loan and
to remain in compliance with the Term Loan’s financial covenants;
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, lower of cost or net realizable value adjustment,
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, lower of cost or net
realizable value adjustment, 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
BelodeauIMS Investor Relations (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 Balance
Sheets(Amounts in thousands, except for share and par
value amounts)
|
|
September 30, |
|
|
December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
(unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
1,378 |
|
|
$ |
5,002 |
|
Trade
accounts receivable – net |
|
|
23,166 |
|
|
|
14,831 |
|
Inventories |
|
|
106,508 |
|
|
|
172,485 |
|
Income
tax receivable |
|
|
- |
|
|
|
9,664 |
|
Prepaid
expenses and other current assets |
|
|
3,560 |
|
|
|
6,934 |
|
Total current
assets |
|
|
134,612 |
|
|
|
208,916 |
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, less accumulated depreciation |
|
|
28,330 |
|
|
|
30,461 |
|
Deferred tax asset |
|
|
- |
|
|
|
- |
|
Goodwill |
|
|
47,803 |
|
|
|
49,464 |
|
Intangible assets, less
accumulated amortization |
|
|
30,194 |
|
|
|
32,419 |
|
Other assets |
|
|
72 |
|
|
|
184 |
|
Total
Assets |
|
$ |
241,011 |
|
|
$ |
321,444 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Trade
accounts payable |
|
$ |
10,836 |
|
|
$ |
10,885 |
|
Accrued
expenses and other current liabilities |
|
|
21,545 |
|
|
|
15,221 |
|
Accrued
payroll |
|
|
1,916 |
|
|
|
3,052 |
|
Current
maturities of long-term debt |
|
|
1,050 |
|
|
|
1,050 |
|
Short-term debt |
|
|
29,065 |
|
|
|
65,152 |
|
Total current
liabilities |
|
|
64,412 |
|
|
|
95,360 |
|
Deferred
tax liability |
|
|
372 |
|
|
|
1,473 |
|
Long-term
debt, less current maturities |
|
|
99,675 |
|
|
|
101,158 |
|
Total
Liabilities |
|
|
164,459 |
|
|
|
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; none issued or outstanding |
|
|
- |
|
|
|
- |
|
Common
stock, $0.01 par value; shares authorized 100,000,000; issued and
outstanding 42,599,431 and 42,398,140 |
|
|
426 |
|
|
|
424 |
|
Additional paid-in capital |
|
|
114,951 |
|
|
|
114,302 |
|
Retained
earnings (accumulated deficit) |
|
|
(38,825 |
) |
|
|
8,727 |
|
Total
Stockholders' Equity |
|
|
76,552 |
|
|
|
123,453 |
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity |
|
$ |
241,011 |
|
|
$ |
321,444 |
|
|
|
Hudson Technologies, Inc. and
SubsidiariesConsolidated Statements of
Operations(unaudited)(Amounts in
thousands, except for share and per share amounts)
|
|
Three months
ended September 30, |
|
|
Nine months
ended September 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
40,545 |
|
|
$ |
24,706 |
|
|
$ |
140,804 |
|
|
$ |
115,766 |
|
Cost of
sales |
|
|
32,816 |
|
|
|
19,636 |
|
|
|
151,252 |
|
|
|
80,811 |
|
Gross
profit |
|
|
7,729 |
|
|
|
5,070 |
|
|
|
(10,448 |
) |
|
|
34,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative |
|
|
7,356 |
|
|
|
3,473 |
|
|
|
26,038 |
|
|
|
9,823 |
|
Amortization |
|
|
742 |
|
|
|
121 |
|
|
|
2,225 |
|
|
|
364 |
|
Total operating expenses |
|
|
8,098 |
|
|
|
3,594 |
|
|
|
28,263 |
|
|
|
10,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss) |
|
|
(369 |
) |
|
|
1,476 |
|
|
|
(38,711 |
) |
|
|
24,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
4,064 |
|
|
|
24 |
|
|
|
10,616 |
|
|
|
170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income
before income taxes |
|
|
(4,433 |
) |
|
|
1,452 |
|
|
|
(49,327 |
) |
|
|
24,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense (benefit) |
|
|
9,447 |
|
|
|
(652 |
) |
|
|
(1,775 |
) |
|
|
8,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income |
|
$ |
(13,880 |
) |
|
$ |
2,104 |
|
|
$ |
(47,552 |
) |
|
$ |
16,362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income per common share – Basic |
|
$ |
(0.33 |
) |
|
$ |
0.05 |
|
|
$ |
(1.12 |
) |
|
$ |
0.39 |
|
Net
(loss) income per common share – Diluted |
|
$ |
(0.33 |
) |
|
$ |
0.05 |
|
|
$ |
(1.12 |
) |
|
$ |
0.38 |
|
Weighted
average number of shares outstanding – Basic |
|
|
42,530,476 |
|
|
|
41,869,528 |
|
|
|
42,445,926 |
|
|
|
41,648,439 |
|
Weighted
average number of shares outstanding – Diluted |
|
|
42,530,476 |
|
|
|
43,463,982 |
|
|
|
42,445,926 |
|
|
|
43,173,427 |
|
Appendix – Non GAAP Reconciliations (unaudited)
Adjusted EBITDA |
|
Three Months
EndedSeptember 30, |
|
|
Nine Months EndedSeptember
30, |
|
|
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income |
|
$ |
(13,880 |
) |
|
$ |
2,104 |
|
|
|
$ |
(47,552 |
) |
|
$ |
16,362 |
|
Income tax (benefit)
expense |
|
|
9,447 |
|
|
|
(652 |
) |
|
|
|
(1,775 |
) |
|
|
8,236 |
|
Interest expense |
|
|
4,064 |
|
|
|
24 |
|
|
|
|
10,616 |
|
|
|
170 |
|
Depreciation
expense |
|
|
1,043 |
|
|
|
358 |
|
|
|
|
3,123 |
|
|
|
1,324 |
|
Amortization
expense |
|
|
742 |
|
|
|
121 |
|
|
|
|
2,225 |
|
|
|
364 |
|
EBITDA |
|
|
1,416 |
|
|
|
1,955 |
|
|
|
|
(33,363 |
) |
|
|
26,456 |
|
Inventory step-up in
basis |
|
|
-- |
|
|
|
-- |
|
|
|
|
3,654 |
|
|
|
-- |
|
Lower of cost or net
realizable value adjustment |
|
|
1,192 |
|
|
|
-- |
|
|
|
|
35,905 |
|
|
|
-- |
|
Stock compensation
expense |
|
|
119 |
|
|
|
28 |
|
|
|
|
332 |
|
|
|
28 |
|
Nonrecurring
expenses |
|
|
2,227 |
|
|
|
1,041 |
|
|
|
|
6,094 |
|
|
|
2,398 |
|
Adjusted
EBITDA |
|
$ |
4,954 |
|
|
$ |
3,024 |
|
|
|
$ |
12,622 |
|
|
$ |
28,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income (Loss) and Net Income (Loss) Per
Share |
|
Three Months
EndedSeptember 30, |
|
|
Nine Months EndedSeptember
30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income |
|
$ |
(13,880 |
) |
|
|
$ |
2,104 |
|
|
|
$ |
(47,552 |
) |
|
|
$ |
16,362 |
|
Income tax (benefit)
expense |
|
|
9,447 |
|
|
|
|
(652 |
) |
|
|
|
(1,775 |
) |
|
|
|
8,236 |
|
Pretax income
(loss) |
|
|
(4,433 |
) |
|
|
|
1,452 |
|
|
|
|
(49,327 |
) |
|
|
|
24,598 |
|
Inventory step-up in
basis |
|
|
-- |
|
|
|
|
-- |
|
|
|
|
3,654 |
|
|
|
|
-- |
|
Lower of cost or net
realizable value adjustment |
|
|
1,192 |
|
|
|
|
-- |
|
|
|
|
35,905 |
|
|
|
|
-- |
|
Amortization
expense |
|
|
742 |
|
|
|
|
121 |
|
|
|
|
2,225 |
|
|
|
|
364 |
|
Stock compensation
expense |
|
|
119 |
|
|
|
|
28 |
|
|
|
|
332 |
|
|
|
|
28 |
|
Nonrecurring
expenses |
|
|
2,227 |
|
|
|
|
1,041 |
|
|
|
|
6,094 |
|
|
|
|
2,398 |
|
Adjusted pretax income (loss) |
|
|
(153 |
) |
|
|
|
2,642 |
|
|
|
|
(1,117 |
) |
|
|
|
27,388 |
|
Income tax expense
(benefit) |
|
|
326 |
|
|
|
|
(1,186 |
) |
|
|
|
(40 |
) |
|
|
|
9,170 |
|
Adjusted
net income (loss) |
|
$ |
(479 |
) |
|
|
$ |
3,828 |
|
|
|
$ |
(1,077 |
) |
|
|
$ |
18,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net
income (loss) per common share |
|
$ |
(0.33 |
) |
|
|
$ |
0.05 |
|
|
|
$ |
(1.12 |
) |
|
|
$ |
0.38 |
|
Adjustment to diluted net income (loss) per common share |
|
$ |
0.32 |
|
|
|
$ |
0.04 |
|
|
|
$ |
1.09 |
|
|
|
$ |
0.04 |
|
Adjusted diluted
net income (loss) per common share |
|
$ |
(0.01 |
) |
|
|
$ |
0.09 |
|
|
|
$ |
(0.03 |
) |
|
|
$ |
0.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson Technologies (NASDAQ:HDSN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hudson Technologies (NASDAQ:HDSN)
Historical Stock Chart
From Apr 2023 to Apr 2024