Net income for the nine-month period ended September 30, 2022 was $98.7 million, an increase of $72.6 million from the $26.1 million of net income reported during the comparable 2021 period, primarily due to higher revenues, as described above.
Liquidity and Capital Resources
At September 30, 2022, the Company had working capital, which represents current assets less current liabilities, of $133.5 million, an increase of $78.0 million from the working capital of $55.5 million at December 31, 2021. The increase in working capital is primarily attributable to increased profitability and the timing of borrowings, accounts receivable and inventory.
Inventories and trade receivables are principal components of current assets. At September 30, 2022, the Company had inventories of $120.2 million, an increase of $26.1 million from $94.1 million at December 31, 2021. The increase in the inventory balance is primarily due to increases in inventory cost in 2022, consistent with the increase in selling price of certain refrigerants. The Company’s ability to sell and replace its inventory on a timely basis and the prices at which it can be sold are subject, among other things, to current market conditions and the nature of supplier or customer arrangements and the Company’s ability to source CFC and HCFC based refrigerants (which are no longer being produced) and HFC refrigerants (virgin production currently in the process of being phased down).
At September 30, 2022, the Company had trade receivables, net of allowance for doubtful accounts, of $38.7 million, an increase of $24.5 million from $14.2 million at December 31, 2021, mainly due to increased sales. The Company’s trade receivables are concentrated with various wholesalers, brokers, contractors and end-users within the refrigeration industry that are primarily located in the continental United States. The Company has historically financed its working capital requirements through cash flows from operations, the issuance of debt and equity securities, and bank borrowings.
Net cash provided by operating activities for the nine-month period ended September 30, 2022 was $60.0 million, when compared to net cash provided by operating activities of $8.0 million for the comparable 2021 period. The variance is primarily due to increased net income in 2022, primarily as a result of increased selling price of certain refrigerants sold, partially offset by increased accounts receivable and inventories.
Net cash used in investing activities for the nine-month period ended September 30, 2022 was $1.7 million compared with net cash used in investing activities of $0.7 million for the comparable 2021 period, mainly due to timing of capital expenditures related to our plants.
Net cash used by financing activities for the nine-month period ended September 30, 2022 was $46.7 million compared with net cash provided by financing activities of $0.8 million for the comparable 2021 period. The Company refinanced its term loan debt during the first quarter of 2022, as described below, and also paid down a significant portion of its term loan during 2022.
At September 30, 2022, cash and cash equivalents were $15.0 million, or approximately $11.5 million higher than the $3.5 million of cash and cash equivalents at December 31, 2021.
Revolving Credit Facility
On March 2, 2022, Hudson Technologies Company (“HTC”) and Hudson Holdings, Inc. (“Holdings”), as borrowers (collectively, the “Borrowers”), and Hudson Technologies, Inc (the “Company”) as a guarantor, entered into an Amended and Restated Credit Agreement (the “Amended Wells Fargo Facility”) with Wells Fargo Bank, National Association, as administrative agent and lender (“Agent” or “Wells Fargo”) and such other lenders as have or may thereafter become a party to the Amended Wells Fargo Facility. The Amended Wells Fargo facility amended and restated the prior Wells Fargo Facility entered into on December 19, 2019.
Under the terms of the Amended Wells Fargo Facility, the Borrowers may borrow up to $90 million consisting of: (i) $15 million immediately borrowed in the form of a “first in last out” term loan (the “FILO Tranche”) and (ii) from time to time, up to $75 million at any time consisting of revolving loans (the “Revolving Loans”) in a maximum amount up to the lesser of $75 million and a borrowing base that is calculated based on the outstanding amount of the Borrowers’ eligible receivables and eligible inventory, as described in the Amended Wells Fargo Facility. The Amended Wells Fargo Facility also contains a sublimit of $9 million for swing line loans and $2 million for letters of credit.
Amounts borrowed under the Amended Wells Fargo Facility may be used for working capital needs, certain permitted acquisitions, and to reimburse drawings under letters of credit.
Interest under the Amended Wells Fargo Facility is payable in arrears on the first day of each month. Interest charges with respect to Revolving Loans are computed on the actual principal amount of Revolving Loans outstanding at a rate per annum equal to (A)