Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the
third quarter ended September 30, 2022.
For the quarter ended September 30, 2022, Hudson
reported revenues of $89.5 million, an increase of 48% compared to
revenues of $60.6 million in the comparable 2021 period. Third
quarter revenue growth was driven by increased selling prices for
certain refrigerants during the period. Gross margin in the third
quarter of 2022 increased to 49%, compared to 39% in the third
quarter of 2021, mainly due to the increase in selling price
without a material appreciation in the cost basis of certain
refrigerants sold. Hudson reported operating income of $36.3
million in the third quarter of 2022, compared to operating income
of $16.9 million in the prior year period. The Company recorded net
income of $29.4 million or $0.65 per basic and $0.62 per diluted
share in the third quarter of 2022, compared to net income of $15.9
million or $0.36 per basic and $0.34 per diluted share in the same
period of 2021. Net income during the third quarter of 2022
included an incremental non-cash tax benefit of $2.8 million
associated with the release of an income tax valuation allowance as
a result of increased profitability.
For the nine months ended September 30, 2022,
Hudson reported revenues of $277.8 million, an increase of 79%
compared to revenues of $155.0 million in the first nine months of
2021. Revenue growth was driven by an increase in selling prices
for certain refrigerants during the period. Gross margin in the
first nine months of 2022 increased to 53%, compared to 35% in the
first nine months of 2021, mainly due to the increase in selling
price without a material appreciation in the cost basis of certain
refrigerants sold. Hudson reported operating income of $124.4
million in the first nine months of 2022, compared to operating
income of $33.0 million in the prior year period. The Company
recorded net income of $98.7 million or $2.20 per basic and $2.10
per diluted share in the first nine months of 2022, compared to net
income of $26.1 million or $0.60 per basic and $0.56 per diluted
share in the same period of 2021. Net income during the first nine
months of 2022 included an incremental non-cash tax benefit of
$14.4 million associated with the release of an income tax
valuation allowance as a result of increased profitability.
Brian F. Coleman, President and Chief Executive
Officer of Hudson Technologies commented, “Our third quarter
performance delivered a strong close to our 2022 selling season, as
reflected in continued record revenues, improved margins and
enhanced profitability. Throughout the selling season we benefited
from sustained higher pricing of certain refrigerants, as well as
our strategic positioning in the supply chain for refrigerants. Our
enhanced profitability and strong free cash flow in 2022 have
allowed us to reduce total debt, including approximately $31
million paid down in the third quarter, strengthening our balance
sheet and improving our financial flexibility as we move through
the close of this year and into 2023.
“As we expected, gross margin in the third quarter, while
significantly improved compared to the third quarter of last year,
has begun to show sequential moderation as compared to gross
margins in the first and second quarters of 2022, as the gap
between inventory cost and sales price has begun to narrow.
“Hudson enjoyed a very successful 2022 selling
season and, with the ongoing stepdown in HFC production and
consumption allowances mandated by the AIM Act, we remain confident
that we are well positioned to meet our longer-term targets. With a
10% stepdown mandated for 2022 and 2023 and a 40% baseline
reduction in virgin production starting 2024, we expect this
phasedown to provide an inflection point for our business as the
industry begins to rely on reclaimed refrigerant to meet its HFC
needs. With our industry-leading reclamation technology, and
longstanding and growing customer base who are aligned with our
commitment to refrigerant management and enhanced reclamation
strategies, we’re uniquely positioned to fill the anticipated HFC
supply gap as virgin production is phased down. We remain intent in
our mission to enable the broad transition to next generation
refrigerants and more efficient equipment by ensuring that the
refrigerants needed for the existing installed base remain
available and easily accessible,” Mr. Coleman concluded.
Conference Call Information
The Company will host a conference call and
webcast to discuss the third quarter results today, November 2,
2022 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 (888)
506-0062 approximately five minutes prior to the scheduled start
time. International callers please dial (973) 528-0011. Callers
should use entry code: 836412.
A replay of the teleconference will be available
until December 2, 2022 and may be accessed by dialing (877)
481-4010. International callers may dial (919) 882-2331. Callers
should use conference ID: 46794.
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 existing credit facilities, 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, the impact of the current COVID-19 pandemic, and other
risks detailed in the Company's 10-K for the year ended December
31, 2021 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@institutionalms.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, |
|
|
2022 |
|
2021 |
|
|
|
(unaudited) |
|
|
|
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
15,049 |
|
$ |
3,492 |
|
Trade accounts receivable – net |
|
|
38,668 |
|
|
14,223 |
|
Inventories |
|
|
120,158 |
|
|
94,144 |
|
Prepaid expenses and other current assets |
|
|
18,742 |
|
|
8,090 |
|
Total current
assets |
|
|
192,617 |
|
|
119,949 |
|
|
|
|
|
|
|
|
Property, plant and equipment,
less accumulated depreciation |
|
|
19,353 |
|
|
20,093 |
|
Goodwill |
|
|
47,803 |
|
|
47,803 |
|
Intangible assets, less
accumulated amortization |
|
|
18,262 |
|
|
20,357 |
|
Right of use asset |
|
|
7,754 |
|
|
6,803 |
|
Other assets |
|
|
762 |
|
|
710 |
|
Total
Assets |
|
$ |
286,551 |
|
$ |
215,715 |
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Trade accounts payable |
|
$ |
14,890 |
|
$ |
9,623 |
|
Accrued expenses and other current liabilities |
|
|
36,060 |
|
|
30,637 |
|
Accrued payroll |
|
|
3,874 |
|
|
3,931 |
|
Current maturities of long-term debt |
|
|
4,250 |
|
|
5,248 |
|
Short-term debt |
|
|
— |
|
|
15,000 |
|
Total current
liabilities |
|
|
59,074 |
|
|
64,439 |
|
Deferred tax liability |
|
|
879 |
|
|
1,692 |
|
Long-term lease liabilities |
|
|
6,178 |
|
|
5,500 |
|
Long-term debt, less current maturities, net of deferred financing
costs |
|
|
49,831 |
|
|
73,145 |
|
Total
Liabilities |
|
|
115,962 |
|
|
144,776 |
|
|
|
|
|
|
|
|
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 45,070,368 and 44,758,925, respectively |
|
|
451 |
|
|
448 |
|
Additional paid-in capital |
|
|
117,238 |
|
|
116,312 |
|
Retained earnings (accumulated deficit) |
|
|
52,900 |
|
|
(45,821 |
) |
Total Stockholders’
Equity |
|
|
170,589 |
|
|
70,939 |
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders’ Equity |
|
$ |
286,551 |
|
$ |
215,715 |
|
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, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenues |
|
$ |
89,502 |
|
|
$ |
60,645 |
|
|
$ |
277,781 |
|
|
$ |
154,973 |
|
Cost of
sales |
|
|
45,263 |
|
|
|
36,967 |
|
|
|
130,225 |
|
|
|
100,329 |
|
Gross
profit |
|
|
44,239 |
|
|
|
23,678 |
|
|
|
147,556 |
|
|
|
54,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
7,219 |
|
|
|
6,072 |
|
|
|
21,057 |
|
|
|
19,586 |
|
Amortization |
|
|
698 |
|
|
|
698 |
|
|
|
2,095 |
|
|
|
2,095 |
|
Total operating expenses |
|
|
7,917 |
|
|
|
6,770 |
|
|
|
23,152 |
|
|
|
21,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
|
36,322 |
|
|
|
16,908 |
|
|
|
124,404 |
|
|
|
32,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income: |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense |
|
|
(2,365 |
) |
|
|
(2,843 |
) |
|
|
(12,293 |
) |
|
|
(8,532 |
) |
Other income |
|
|
— |
|
|
|
2,475 |
|
|
|
— |
|
|
|
2,470 |
|
Total other
(expense) |
|
|
(2,365 |
) |
|
|
(368 |
) |
|
|
(12,293 |
) |
|
|
(6,062 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
33,957 |
|
|
|
16,540 |
|
|
|
112,111 |
|
|
|
26,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
|
4,601 |
|
|
|
670 |
|
|
|
13,390 |
|
|
|
830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
29,356 |
|
|
$ |
15,870 |
|
|
$ |
98,721 |
|
|
$ |
26,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share –
Basic |
|
$ |
0.65 |
|
|
$ |
0.36 |
|
|
$ |
2.20 |
|
|
$ |
0.60 |
|
Net income per common share –
Diluted |
|
$ |
0.62 |
|
|
$ |
0.34 |
|
|
$ |
2.10 |
|
|
$ |
0.56 |
|
Weighted average number of
shares outstanding – Basic |
|
|
45,063,810 |
|
|
|
43,870,825 |
|
|
|
44,935,739 |
|
|
|
43,576,211 |
|
Weighted average number of
shares outstanding – Diluted |
|
|
47,181,424 |
|
|
|
46,964,522 |
|
|
|
47,053,010 |
|
|
|
46,412,691 |
|
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