Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the
fourth quarter and year ended December 31, 2023.
For the quarter ended December 31, 2023, Hudson
reported revenues of $44.9 million, a decrease of 5% compared to
revenues of $47.4 million in the comparable 2022 period. The
decrease is primarily related to decreased selling prices for
certain refrigerants, offset by slightly higher volume. Gross
margin in the fourth quarter of 2023 was 31%, compared to 32% in
the fourth quarter of 2022. Hudson reported operating income of
$4.7 million in the fourth quarter of 2023, compared to operating
income of $7.1 million in the prior year period. The Company
recorded net income of $3.9 million or $0.09 per basic and $0.08
per diluted share in the fourth quarter of 2023, compared to net
income of $5.1 million or $0.11 per basic and diluted share in the
same period of 2022.
For the year ended December 31, 2023, Hudson
reported revenues of $289.0 million, a decrease of 11% compared to
revenues of $325.2 million for full year 2022. Revenue for the full
year 2023 declined primarily related to decreased selling prices
for certain refrigerants. Included in the full year 2023 revenues
was approximately $53 million from the Company’s Defense Logistics
Agency (“DLA”) contract, which represented a record annual revenue
from the contract. The Company estimates that approximately $20
million of 2023 DLA revenue is related to increased DLA-specific
program activities that may not be repeated in 2024. Gross margin
for full year 2023 was 39%, compared to gross margin of 50% in the
prior year period. Hudson reported operating income of $78.2
million for full year 2023 compared to operating income of $131.5
million in the prior year. The Company recorded net income of $52.2
million or $1.15 per basic and $1.10 per diluted share in 2023,
compared to a net income of $103.8 million or $2.31 per basic and
$2.20 per diluted share in 2022.
As previously announced, Hudson fully paid off
its remaining $32.5 million of term loan debt during the third
quarter of 2023. Stockholders’ equity improved to $228.8 million at
December 31, 2023 compared to $174.9 million at December 31,
2022.
Brian F. Coleman, President and Chief Executive
Officer of Hudson Technologies commented, “We delivered a solid
fourth quarter consistent with historical fourth quarter
performance, which is typically our lowest revenue quarter because
it falls outside of our nine-month selling season. Despite a 24%
decline in pricing during Q4 2023 when compared to Q4 2022,
revenues were only down 5%, stemming from higher volume and
increased revenues from our DLA contract. Furthermore, for the full
year 2023 the business generated cash flow from operations of $58.5
million.”
“We remain optimistic that the ongoing stepdown
in HFC production and consumption allowances and the proposed
reclamation mandates as a result of the AIM Act will benefit our
business. The stepdown in virgin production and consumption now
represents 40% of the baseline for 2024 through 2028. As we’ve
previously mentioned, we believe that the proposed Refrigerant
Management rule will drive higher demand for our reclaimed
refrigerants due to the mandates for the use of reclaimed
refrigerants in certain sectors. We believe a final rule will be
issued this summer. Likewise, we are encouraged by existing and
proposed legislation at both the federal and various state levels
that promotes the use of reclaimed refrigerant.
“Hudson has held a leadership role in the
refrigerant industry for more than thirty years, and we have long
been committed to developing sustainable solutions around
responsible refrigerant management and the adoption of reclamation.
We are uniquely positioned to leverage our expertise and
industry-leading reclamation technology to help drive the
transition to more efficient cooling equipment and greener
refrigerants, while also servicing the existing installed base with
reclaimed refrigerants as the industry continues to evolve,” Mr.
Coleman concluded.
Conference Call Information
The Company will host a conference call and
webcast to discuss the fourth quarter and year end results today,
March 6, 2024 at 5:00 P.M. Eastern Time.
To access the live webcast, please use this
link;
https://www.webcaster4.com/Webcast/Page/2161/49792
To participate in the call by phone, dial (877)
545-0523 approximately five minutes prior to the scheduled start
time. International callers please dial (973) 528-0016. Callers
should use entry code: 432603.
A replay of the teleconference will be available
until April 5, 2024 and may be accessed by dialing (877) 481-4010.
International callers may dial (919) 882-2331. Callers should use
conference ID: 49792.
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, and other risks detailed in the Company's 10-K for the
year ended December 31, 2022 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(unaudited)(Amounts in thousands,
except for share and par value amounts)
|
|
|
|
|
|
|
|
|
December 31, |
|
|
2023 |
|
2022 |
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
12,446 |
|
$ |
5,295 |
Trade accounts receivable – net |
|
|
25,169 |
|
|
20,872 |
Inventories |
|
|
154,450 |
|
|
145,377 |
Income tax receivable |
|
|
5,438 |
|
|
— |
Prepaid expenses and other current assets |
|
|
7,492 |
|
|
5,289 |
Total current assets |
|
|
204,995 |
|
|
176,833 |
|
|
|
|
|
|
|
Property, plant and equipment,
less accumulated depreciation |
|
|
19,375 |
|
|
20,568 |
Goodwill |
|
|
47,803 |
|
|
47,803 |
Intangible assets, less
accumulated amortization |
|
|
14,771 |
|
|
17,564 |
Right of use asset |
|
|
6,591 |
|
|
7,339 |
Other assets |
|
|
3,137 |
|
|
2,386 |
Total Assets |
|
$ |
296,672 |
|
$ |
272,493 |
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Trade accounts payable |
|
$ |
23,399 |
|
$ |
14,165 |
Accrued expenses and other current liabilities |
|
|
31,537 |
|
|
27,908 |
Accrued payroll |
|
|
3,615 |
|
|
6,303 |
Current maturities of long-term debt |
|
|
— |
|
|
4,250 |
Total current liabilities |
|
|
58,551 |
|
|
52,626 |
Deferred tax liability |
|
|
4,558 |
|
|
244 |
Long-term lease
liabilities |
|
|
4,790 |
|
|
5,763 |
Long-term debt, less current
maturities, net of deferred financing costs |
|
|
— |
|
|
38,985 |
Total Liabilities |
|
|
67,899 |
|
|
97,618 |
|
|
|
|
|
|
|
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: 45,502,380 and 45,287,619 respectively |
|
|
455 |
|
|
453 |
Additional paid-in capital |
|
|
118,091 |
|
|
116,442 |
Retained earnings |
|
|
110,227 |
|
|
57,980 |
Total Stockholders’ Equity |
|
|
228,773 |
|
|
174,875 |
|
|
|
|
|
|
|
Total Liabilities and
Stockholders’ Equity |
|
$ |
296,672 |
|
$ |
272,493 |
|
|
|
|
|
|
|
Hudson Technologies, Inc. and
SubsidiariesConsolidated Income
Statements(unaudited)(Amounts in
thousands, except for share and per share amounts)
|
|
Three months
ended December 31, |
|
Twelve monthsended December 31, |
|
|
2023 |
|
|
2022 |
|
2023 |
|
|
2022 |
Revenues |
|
$ |
44,856 |
|
|
$ |
47,444 |
|
|
$ |
289,025 |
|
|
$ |
325,225 |
|
Cost of
sales |
|
|
30,886 |
|
|
|
32,107 |
|
|
|
177,518 |
|
|
|
162,332 |
|
Gross
profit |
|
|
13,970 |
|
|
|
15,337 |
|
|
|
111,507 |
|
|
|
162,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
8,532 |
|
|
|
7,534 |
|
|
|
30,542 |
|
|
|
28,591 |
|
Amortization |
|
|
698 |
|
|
|
698 |
|
|
|
2,793 |
|
|
|
2,793 |
|
Total operating expenses |
|
|
9,230 |
|
|
|
8,232 |
|
|
|
33,335 |
|
|
|
31,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
|
4,740 |
|
|
|
7,105 |
|
|
|
78,172 |
|
|
|
131,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense |
|
|
(246 |
) |
|
|
(2,034 |
) |
|
|
(8,352 |
) |
|
|
(14,327 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes |
|
|
4,494 |
|
|
|
5,071 |
|
|
|
69,820 |
|
|
|
117,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense (benefit) |
|
|
549 |
|
|
|
(9 |
) |
|
|
17,573 |
|
|
|
13,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
3,945 |
|
|
$ |
5,080 |
|
|
$ |
52,247 |
|
|
$ |
103,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share – Basic |
|
$ |
0.09 |
|
|
$ |
0.11 |
|
|
$ |
1.15 |
|
|
$ |
2.31 |
|
Net income per
common share – Diluted |
|
$ |
0.08 |
|
|
$ |
0.11 |
|
|
$ |
1.10 |
|
|
$ |
2.20 |
|
Weighted average
number of shares outstanding – Basic |
|
|
45,496,296 |
|
|
|
45,151,426 |
|
|
|
45,385,433 |
|
|
|
44,990,104 |
|
Weighted average
number of shares outstanding – Diluted |
|
|
47,446,365 |
|
|
|
47,238,439 |
|
|
|
47,338,231 |
|
|
|
47,109,018 |
|
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