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, N.J., Nov. 04, 2024 (GLOBE NEWSWIRE) -- 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.

Investor Relations Contact: John Nesbett/Jennifer Belodeau IMS Investor Relations (203) 972-9200 [email protected]		Company Contact: Brian F. Coleman, President & CEO Hudson Technologies, Inc. (845) 735-6000 [email protected]

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