Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the
fourth quarter and year ended December 31, 2018. The
financial results for both 2018 and 2017 include the operations of
Aspen Refrigerants, Inc. (“ARI”) which was acquired on October 10,
2017.
For the quarter ended December 31, 2018 Hudson
reported revenues of $25.7 million, an increase of 5% compared to
$24.6 million in the comparable 2017 period, which was primarily
attributable to a 38% increase in the number of pounds of certain
refrigerants sold, partially offset by price declines of certain
refrigerants. Gross margin in the fourth quarter of 2018 was
12%, essentially consistent with gross margin of 12.3% in the
fourth quarter of 2017. The Company recorded a net loss of $8.1
million or ($0.19) per basic and diluted share in the fourth
quarter of 2018, as compared to a net loss of $5.2 million or
($0.12) per basic and diluted share in the same period of
2017. During the fourth quarter of 2018 there were no
benefits for income taxes, compared to a $7.4 million income tax
benefit during the fourth quarter of 2017 related to the Tax Cuts
& Jobs Act. For the year ended
December 31, 2018, Hudson reported revenues of $166.5 million, an
increase of 19% compared to $140.4 million for full year
2017. The Company had negative gross margin for 2018 due to a
non-cash inventory write down of approximately $35.9 million and an
additional amortization of inventory step-up in basis of
approximately $3.7 million, as compared to a gross margin of 27% in
2017. The Company’s net loss for 2018 was $55.7 million, or
($1.31) per basic and diluted share, which included non-cash
inventory adjustments totaling approximately $39.6 million and
non-recurring expense of approximately $6.1 million primarily
related to the acquisition and integration of ARI, as compared to
net income of $11.2 million or $0.27 per basic and $0.26 per
diluted share in 2017. Full year 2017 net income includes the
aforementioned $7.4 million benefit related to the Tax Cuts &
Jobs Act.
Kevin J. Zugibe, Chairman and Chief Executive
Officer of Hudson Technologies commented, “2018 was a challenging
year, characterized by one of the most difficult selling seasons
we’ve experienced to date. In addition to severe price
corrections in nearly all of the refrigerants we sell, a
‘just-in-time’ buying pattern emerged, which resulted in lower than
expected demand throughout the traditional nine-month selling
season. During the fourth quarter of 2018 however, we saw an
increase in demand for certain refrigerants, an unusual development
as our fourth quarter is typically characterized by negligible
sales volume. While the demand increase was offset by lower
pricing, we were pleased to see this increased order activity from
our customer base.
“During the fourth quarter we implemented
several efficiency initiatives which we expect to complete by the
end of March 2019. The resulting annual benefit from these
initiatives is expected to be over $3 million in cost
reductions. Additionally, we believe we have the opportunity
to drive improved margins in 2019 as we replace higher priced
inventory with lower priced product. In addition, despite the
headwinds we faced in 2018, the Company generated $36 million of
cash flow from operations and paid down $37 million of debt in
2018.
“We’re optimistic about the positive momentum
we’re seeing for the regulation of HFC refrigerants. With the
anticipated phase down of HFCs, we expect to see the establishment
of an allocation system as well as a tightening in the
supply/demand balance 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, “As we progress through
2019, we believe our longstanding customer base, diversified
product offerings and efficient and expanded distribution network
leave us well positioned to capitalize on the market opportunities
we are seeing with existing and next generation refrigerants.
We remain focused on meeting the needs of our customers and
exceeding their expectations in terms of product availability and
delivery 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 6, 2019
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 6, 2019 and may be accessed by dialing (877) 481-4010.
International callers may dial (919) 882-2331. Callers should
use conference ID: 44519.
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 loan 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, 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.
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 |
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Hudson
Technologies, Inc. and SubsidiariesConsolidated
Balance Sheets(Amounts in thousands, except for share and
par value amounts) |
|
|
|
|
|
December 31, |
|
|
|
2018 |
|
|
2017 |
|
Assets |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
2,272 |
|
|
$ |
5,002 |
|
Trade
accounts receivable – net |
|
|
14,065 |
|
|
|
14,831 |
|
Inventories |
|
|
101,962 |
|
|
|
172,485 |
|
Income
tax receivable |
|
|
— |
|
|
|
9,664 |
|
Prepaid
expenses and other current assets |
|
|
5,287 |
|
|
|
6,934 |
|
Total current assets |
|
|
123,586 |
|
|
|
208,916 |
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, less accumulated depreciation |
|
|
27,395 |
|
|
|
30,461 |
|
Goodwill |
|
|
47,803 |
|
|
|
49,464 |
|
Intangible assets, less
accumulated amortization |
|
|
29,451 |
|
|
|
32,419 |
|
Other assets |
|
|
106 |
|
|
|
184 |
|
Total Assets |
|
$ |
228,341 |
|
|
$ |
321,444 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Trade
accounts payable |
|
$ |
8,671 |
|
|
$ |
10,885 |
|
Accrued
expenses and other current liabilities |
|
|
19,023 |
|
|
|
15,221 |
|
Accrued
payroll |
|
|
1,046 |
|
|
|
3,052 |
|
Current
maturities of long-term debt |
|
|
2,672 |
|
|
|
1,050 |
|
Short-term debt |
|
|
29,000 |
|
|
|
65,152 |
|
Total current liabilities |
|
|
60,412 |
|
|
|
95,360 |
|
Deferred tax
liability |
|
|
443 |
|
|
|
1,473 |
|
Long-term debt, less
current maturities, net of deferred financing costs |
|
|
98,273 |
|
|
|
101,158 |
|
Total Liabilities |
|
|
159,128 |
|
|
|
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 42,602,431 and 42,398,140 |
|
|
426 |
|
|
|
424 |
|
Additional paid-in capital |
|
|
115,719 |
|
|
|
114,302 |
|
Retained
earnings (Accumulated deficit) |
|
|
(46,932 |
) |
|
|
8,727 |
|
Total Stockholders' Equity |
|
|
69,213 |
|
|
|
123,453 |
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity |
|
$ |
228,341 |
|
|
$ |
321,444 |
|
|
|
|
|
|
|
|
|
|
|
|
Hudson
Technologies, Inc. and SubsidiariesConsolidated
Statements of
Operations(unaudited)(Amounts in
thousands, except for share and per share amounts) |
|
|
|
|
|
Three months ended December
31, |
|
|
Twelve months ended December
31, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
25,721 |
|
|
$ |
24,613 |
|
|
$ |
166,525 |
|
|
$ |
140,380 |
|
Cost of
sales |
|
|
22,638 |
|
|
|
21,586 |
|
|
|
173,890 |
|
|
|
102,396 |
|
Gross profit
(loss) |
|
|
3,083 |
|
|
|
3,027 |
|
|
|
(7,365 |
) |
|
|
37,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative |
|
|
6,232 |
|
|
|
11,921 |
|
|
|
32,270 |
|
|
|
21,745 |
|
Amortization |
|
|
748 |
|
|
|
743 |
|
|
|
2,973 |
|
|
|
1,107 |
|
Total operating expenses |
|
|
6,980 |
|
|
|
12,664 |
|
|
|
35,243 |
|
|
|
22,852 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss) |
|
|
(3,897 |
) |
|
|
(9,637 |
) |
|
|
(42,608 |
) |
|
|
15,132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
4,139 |
|
|
|
2,958 |
|
|
|
14,755 |
|
|
|
3,128 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income
before income taxes |
|
|
(8,036 |
) |
|
|
(12,595 |
) |
|
|
(57,363 |
) |
|
|
12,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense (benefit) |
|
|
71 |
|
|
|
(7,389 |
) |
|
|
(1,704 |
) |
|
|
847 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income |
|
$ |
(8,107 |
) |
|
$ |
(5,206 |
) |
|
$ |
(55,659 |
) |
|
$ |
11,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income per common share – Basic |
|
$ |
(0.19 |
) |
|
$ |
(0.12 |
) |
|
$ |
(1.31 |
) |
|
$ |
0.27 |
|
|
Net
(loss) income per common share – Diluted |
|
$ |
(0.19 |
) |
|
$ |
(0.12 |
) |
|
$ |
(1.31 |
) |
|
$ |
0.26 |
|
|
Weighted
average number of shares outstanding – Basic |
|
|
42,600,898 |
|
|
|
42,216,987 |
|
|
|
42,484,972 |
|
|
|
41,764,230 |
|
|
Weighted
average number of shares outstanding – Diluted |
|
|
42,600,898 |
|
|
|
42,216,987 |
|
|
|
42,484,972 |
|
|
|
42,766,843 |
|
|
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