Hudson Technologies Inc.
11/04/2024 | Press release | Distributed by Public on 11/04/2024 15:17
HUDSON TECHNOLOGIES REPORTS THIRD quarter 2024 reSults Form 8 K
HUDSON TECHNOLOGIES REPORTS THIRD quarter 2024 reSults
| · | Third Quarter Revenue of $61.9 million |
| · | Net income of $7.8 million or $0.17 per diluted share |
| · | Strengthened balance sheet with $56.5 million in cash and no debt |
| · | Repurchased $2.6 million of common stock during the third quarter |
WOODCLIFF LAKE, NJ - November 4, 2024 - Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the third quarter and nine months ended September 30, 2024.
Brian F. Coleman, President and Chief Executive Officer of Hudson Technologies commented,
"Our third quarter results reflected continued pricing pressure that persisted for certain refrigerants throughout the 2024 cooling season. While disappointing in the near term, pricing trends are only one element of our business model and we remain confident in our long-term growth strategy to capitalize on the phasedown of HFC refrigerants and the expected corresponding growth in demand for reclaimed refrigerants. With our current visibility, we are adjusting our expectation for full year 2024 revenue, which we anticipate will be at the low end of the guidance range we previously provided, with full year gross margin of approximately 28%.
"The EPA recently finalized the Refrigerant Management rule pursuant to subsection (H) of the AIM Act, providing reclaim mandates for use in servicing certain sectors of the market beginning in 2029, and we view this as a positive step in the industry's transition to the broader use of reclaimed refrigerants. Throughout our many decades in the refrigerant industry we have remained focused on the elements of our business we can control: ensuring that our customers have reliable supply of the refrigerants they need and promoting recovery and reclamation activities to enable the ongoing evolution to more efficient equipment and sustainable refrigerant management practices.
"Our unlevered balance sheet strengthened during the quarter with no debt and $56.5 million in cash at September 30, 2024. Additionally, during the quarter, as part of our capital allocation strategy, we repurchased $2.6 million of common stock under our recently established stock buyback plan," Mr. Coleman concluded.
Three Months Results
For the quarter ended September 30, 2024, Hudson reported:
| · | Revenues of $61.9 million, a decrease of 19% compared to revenues of $76.5 million in the comparable 2023 period. The decrease is primarily related to decreased prices for certain refrigerants, as well as slightly lower revenue from the Company's DLA contract in the quarter compared to the third quarter of 2023. |
| · | Gross margin of 26%, compared to 40% in the third quarter of 2023. | |
| · | Selling, general and administrative expenses increased to $8.1 million compared to $6.8 million in the third quarter of 2023, primarily related to higher personnel costs and professional fees. |
| · | Operating income of $7.0 million, compared to operating income of $23.1 million in the prior year period. |
| · | Net income of $7.8 million or $0.17 per basic and diluted share in the third quarter of 2024, compared to net income of $13.6 million or $0.30 per basic and $0.29 per diluted share in the same period of 2023. Of note, net income for the third quarter of 2024 included approximately $2.3 million of non-recurring income, arising in part from proceeds of a litigation settlement. |
Nine Months Results
For the nine months ended September 30, 2024, Hudson reported:
| · | Revenues of $202.5 million, a decrease of 17% compared to revenues of $244.2 million for the first nine months of 2023. Revenues declined primarily due to decreased selling prices for certain refrigerants as well as lower revenue from the Company's DLA contract. |
| · | Gross margin of 30%, compared to gross margin of 40% in the first nine months of 2023. |
| · | Selling, general and administrative expenses increased to $25.0 million compared to $22.0 million in the first nine months of 2023. Included in the year to date, 2024 selling, general and administrative expenses are approximately $0.7 million of non-recurring costs associated with the USA acquisition and IT expenses. |
| · | Operating income of $32.5 million compared to operating income of $73.4 million in the first nine months of 2023. |
| · | Net income of $27.0 million or $0.59 per basic and $0.57 per diluted share, compared to net income of $48.3 million or $1.07 per basic and $1.02 per diluted share in the first nine months of 2023. Net income in the first nine months included approximately $2.3 million of non-recurring income, arising in part from proceeds of a litigation settlement as mentioned above. |
The Company announced the establishment of a stock repurchase program during the third quarter of 2024, under which it repurchased $2.6 million of common stock. Additionally, subsequent to the close of the quarter, on October 25, 2024 Hudson announced that its board of directors approved an increase to the Company's share repurchase program. Hudson may now purchase up to $20 million in shares of its common stock, consisting of up to $10 million in shares during each of calendar year 2024 and 2025. The Company had previously announced that its board had authorized the repurchase of $10 million of outstanding common stock during 2024 and 2025.
Conference Call Information
The Company will host a conference call and webcast to discuss the third quarter results today, November 4, 2024, at 5:00 P.M. Eastern Time.
Advance registration for the call is required. Please visit this link by 4:30 p.m. Eastern Time today, Monday, November 4, 2024 to register and receive dial-in and webcast details.
A replay of the teleconference will be available until December 4, 2024, and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 51297.
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 its existing credit facility, 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, and other risks detailed in the Company's 10-K for the year ended December 31, 2023 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.
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Hudson Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(Amounts in thousands, except for share and par value amounts)
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 56,487 | $ | 12,446 | ||||
| Trade accounts receivable - net | 28,547 | 25,169 | ||||||
| Inventories | 103,523 | 154,450 | ||||||
| Income tax receivable | 3,645 | 5,438 | ||||||
| Prepaid expenses and other current assets | 11,308 | 7,492 | ||||||
| Total current assets | 203,510 | 204,995 | ||||||
| Property, plant and equipment, less accumulated depreciation | 20,075 | 19,375 | ||||||
| Goodwill | 62,420 | 47,803 | ||||||
| Intangible assets, less accumulated amortization | 14,982 | 14,771 | ||||||
| Right of use asset | 5,217 | 6,591 | ||||||
| Other assets | 3,224 | 3,137 | ||||||
| Total Assets | $ | 309,428 | $ | 296,672 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 11,060 | $ | 23,399 | ||||
| Accrued expenses and other current liabilities | 31,595 | 31,537 | ||||||
| Accrued payroll | 3,908 | 3,615 | ||||||
| Total current liabilities | 46,563 | 58,551 | ||||||
| Deferred tax liability | 3,538 | 4,558 | ||||||
| Long-term lease liabilities | 3,832 | 4,790 | ||||||
| Other long-term liabilities | 1,600 | - | ||||||
| Total Liabilities | 55,533 | 67,899 | ||||||
| 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: 45,198,507 and 45,502,380, respectively | 452 | 455 | ||||||
| Additional paid-in capital | 116,263 | 118,091 | ||||||
| Retained earnings | 137,180 | 110,227 | ||||||
| Total Stockholders' Equity | 253,895 | 228,773 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 309,428 | $ | 296,672 |
Hudson Technologies, Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited)
(Amounts in thousands, except for share and per share amounts)
| Three months | Nine months | |||||||||||||||
| ended September 30, | ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues | $ | 61,943 | $ | 76,496 | $ | 202,475 | $ | 244,169 | ||||||||
| Cost of sales | 46,001 | 45,916 | 142,541 | 146,632 | ||||||||||||
| Gross profit | 15,942 | 30,580 | 59,934 | 97,537 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 8,059 | 6,760 | 25,019 | 22,010 | ||||||||||||
| Amortization | 910 | 698 | 2,368 | 2,095 | ||||||||||||
| Total operating expenses | 8,969 | 7,458 | 27,387 | 24,105 | ||||||||||||
| Operating income | 6,973 | 23,122 | 32,547 | 73,432 | ||||||||||||
| Other (income) expense: | ||||||||||||||||
| Interest expense (income) | (315 | ) | 4,358 | 51 | 8,106 | |||||||||||
| Other income | (2,250 | ) | - | (2,250 | ) | - | ||||||||||
| Total other (income) expense | (2,565 | ) | 4,358 | (2,199 | ) | 8,106 | ||||||||||
| Income before income taxes | 9,538 | 18,764 | 34,746 | 65,326 | ||||||||||||
| Income tax expense | 1,732 | 5,182 | 7,793 | 17,024 | ||||||||||||
| Net income | $ | 7,806 | $ | 13,582 | $ | 26,953 | $ | 48,302 | ||||||||
| Net income per common share - Basic | $ | 0.17 | $ | 0.30 | $ | 0.59 | $ | 1.07 | ||||||||
| Net income per common share - Diluted | $ | 0.17 | $ | 0.29 | $ | 0.57 | $ | 1.02 | ||||||||
| Weighted average number of shares outstanding - Basic | 45,435,458 | 45,404,963 | 45,486,263 | 45,348,072 | ||||||||||||
| Weighted average number of shares outstanding - Diluted | 47,135,443 | 47,345,380 | 47,278,638 | 47,319,464 |
Hudson Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
(Amounts in thousands)
| Nine month-period | ||||||||
| ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 26,953 | $ | 48,302 | ||||
| Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
| Depreciation | 2,274 | 2,213 | ||||||
| Amortization of intangible assets | 2,368 | 2,095 | ||||||
| Impairment of long lived assets | 441 | - | ||||||
| Lower of cost or net realizable value inventory adjustment | 3,811 | (2,195 | ) | |||||
| Allowance for credit losses | 14 | 800 | ||||||
| Share based compensation | 808 | 2,061 | ||||||
| Amortization of deferred finance costs | 171 | 669 | ||||||
| Loss on extinguishment of debt | - | 3,427 | ||||||
| Deferred tax expense | (1,020 | ) | 4,280 | |||||
| Changes in assets and liabilities: | ||||||||
| Trade accounts receivable | (733 | ) | (24,863 | ) | ||||
| Inventories | 52,189 | 8,341 | ||||||
| Prepaid and other assets | (6,732 | ) | (684 | ) | ||||
| Lease obligations | (6 | ) | 1 | |||||
| Income taxes receivable | 1,794 | (4,212 | ) | |||||
| Accounts payable and accrued expenses | (11,229 | ) | 3,283 | |||||
| Cash provided by operating activities | 71,103 | 43,518 | ||||||
| Cash flows from investing activities: | ||||||||
| Payments for acquisition | (20,670 | ) | - | |||||
| Additions to property, plant, and equipment | (3,752 | ) | (2,215 | ) | ||||
| Cash used in investing activities | (24,422 | ) | (2,215 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | - | 39 | ||||||
| Repurchase of common shares | (2,636 | ) | - | |||||
| Excess tax benefits from exercise of stock options | (4 | ) | (693 | ) | ||||
| Borrowing of short-term debt - net | - | 5,000 | ||||||
| Repayment of long-term debt | - | (47,161 | ) | |||||
| Cash used in financing activities | (2,640 | ) | (42,815 | ) | ||||
| Increase (decrease) in cash and cash equivalents | 44,041 | (1,512 | ) | |||||
| Cash and cash equivalents at beginning of period | 12,446 | 5,295 | ||||||
| Cash and cash equivalents at end of period | $ | 56,487 | $ | 3,783 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 529 | $ | 4,232 | ||||
| Cash paid for income taxes - net | $ | 7,042 | $ | 16,955 |