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Hudson Technologies Reports Record Second Quarter 2022 Results; Raises 2022 Forecast and Provides Update on Longer-Term Targets

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Hudson Technologies
Hudson Technologies

WOODCLIFF LAKE, N.J., Aug. 03, 2022 (GLOBE NEWSWIRE) -- Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the second quarter ended June 30, 2022.

For the quarter ended June 30, 2022, Hudson reported revenues of $103.9 million, an increase of 72% compared to revenues of $60.5 million in the comparable 2021 period. Second quarter revenue growth was driven by increased selling prices for certain refrigerants during the period. Gross margin in the second quarter of 2022 increased to 55%, compared to 36% in the second 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 $49.8 million in the second quarter of 2022, compared to operating income of $14.4 million in the prior year period. The Company recorded net income of $39.8 million or $0.89 per basic and $0.84 per diluted share in the second quarter of 2022, compared to net income of $11.3 million or $0.26 per basic and $0.24 per diluted share in the same period of 2021. Net income during the second quarter of 2022 included an incremental non-cash tax benefit of $11.6 million associated with the release of an income tax valuation allowance as a result of increased profitability.

For the six months ended June 30, 2022, Hudson reported revenues of $188.3 million, an increase of 100% compared to revenues of $94.3 million in the first six months of 2021. Revenue growth in the first half of 2022 was driven by an increase in selling prices for certain refrigerants during the period. Gross margin in the first six months of 2022 increased to 55%, compared to 33% in the first six 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 $88.1 million in the first six months of 2022, compared to operating income of $16.1 million in the prior year period. The Company recorded net income of $69.4 million or $1.55 per basic and $1.48 per diluted share in the first six months of 2022, compared to net income of $10.2 million or $0.23 per basic and $0.22 per diluted share in the same period of 2021. As stated above, net income during the first six months of 2022 included an incremental non-cash tax benefit of $11.6 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, “We delivered strong second quarter results, as evidenced by substantial revenue growth, significantly enhanced margins and increased profitability. We’re seeing consistent momentum as our selling season progresses and our second quarter results reflect sustained strength in the pricing of certain refrigerants. Moreover, our first half profitability and increased cash flow have strengthened our balance sheet by reducing our total debt by $11.1 million during the second quarter of 2022.

“As we’ve mentioned before, 2022 marks the start of industry compliance with the AIM Act, which mandates a 10% stepdown in production and consumption allowances for virgin HFCs in both 2022 and 2023 and a 40% baseline reduction in 2024. This phasedown is expected to drive a significant inflection point for our business as the industry begins to rely on reclaimed refrigerant to meet its HFC needs. As a leading reclaimer, Hudson is uniquely positioned to fill the anticipated HFC supply gap as virgin production is phased out, as well as meeting the demand of all other refrigerants, including CFCs, HCFCs and HFOs.   We remain committed to providing the products and services to enable an industry-wide transition to cleaner refrigerants and more efficient equipment. This is an exciting time for our Company, and we are intent on growing our leadership role and strategic partnerships in the refrigerant marketplace and as a steward of environmentally sound, sustainable refrigerant management.”

Company Increases 2022 Forecast and Provides New 3-Year Target

Mr. Coleman continued, “Given the pricing dynamics to date for the current selling season, we are increasing our previously stated 2022 forecast and longer-term targets. Based on current pricing levels, we should see revenues in excess of $290 million for full year 2022.  While we continue to believe margin performance for the full year will moderate due to increases in inventory cost and anticipated stabilization in sales prices during the balance of this season, with our visibility today we now believe full year blended gross margin will be at least in the mid 40% range.

“In 2022, we are seeing the accelerated shift to what we expect will be significantly higher and sustained profitability for the business going forward.  Assuming further HFC price increases related to the HFC phasedown under the AIM Act, albeit at a slower pace than we saw in 2022, we are targeting annualized revenue of greater than $400 million by 2025 with gross margins remaining above historical levels but moderating over the next three years to approximately 35%.  This shift we are seeing to significantly increased profits for the business provides considerably enhanced financial flexibility for us to invest in our long- term growth while also continuing to reduce debt,” Mr. Coleman concluded.

Conference Call Information

The Company will host a conference call and webcast to discuss the second quarter results today, August 3, 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: 252053.

A replay of the teleconference will be available until September 2, 2022 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 46167.

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 Belodeau
IMS Investor Relations
(203) 972-9200
jnesbett@institutionalms.com

Company Contact:
Brian F. Coleman, President & CEO
Hudson Technologies, Inc.
(845) 735-6000
bcoleman@hudsontech.com


Hudson Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(Amounts in thousands, except for share and par value amounts)

 

    

June 30, 

    

December 31, 

 

 

2022

 

2021

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

20,682

 

$

3,492

 

Trade accounts receivable – net

 

 

43,744

 

 

14,223

 

Inventories

 

 

118,664

 

 

94,144

 

Prepaid expenses and other current assets

 

 

7,205

 

 

8,090

 

Total current assets

 

 

190,295

 

 

119,949

 

 

 

 

 

 

 

 

Property, plant and equipment, less accumulated depreciation

 

 

19,187

 

 

20,093

 

Goodwill

 

 

47,803

 

 

47,803

 

Intangible assets, less accumulated amortization

 

 

18,960

 

 

20,357

 

Right of use asset

 

 

7,794

 

 

6,803

 

Other assets

 

 

690

 

 

710

 

Total Assets

 

$

284,729

 

$

215,715

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Trade accounts payable

 

$

13,877

 

$

9,623

 

Accrued expenses and other current liabilities

 

 

35,978

 

 

30,637

 

Accrued payroll

 

 

2,637

 

 

3,931

 

Current maturities of long-term debt

 

 

4,250

 

 

5,248

 

Short-term debt

 

 

 

 

15,000

 

Total current liabilities

 

 

56,742

 

 

64,439

 

Deferred tax liability

 

 

90

 

 

1,692

 

Long-term lease liabilities

 

 

6,283

 

 

5,500

 

Long-term debt, less current maturities, net of deferred financing costs

 

 

80,677

 

 

73,145

 

Total Liabilities

 

 

143,792

 

 

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 45,020,087 and 44,758,925, respectively

 

 

450

 

 

448

 

Additional paid-in capital

 

 

116,943

 

 

116,312

 

Retained earnings (accumulated deficit)

 

 

23,544

 

 

(45,821

)

Total Stockholders’ Equity

 

 

140,937

 

 

70,939

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

 

$

284,729

 

$

215,715

 

See Accompanying Notes to the Consolidated Financial Statements

Hudson Technologies, Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited)
(Amounts in thousands, except for share and per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three months

    

Six months

 

 

ended June 30, 

 

ended June 30, 

 

    

2022

    

2021

    

2022

    

2021

Revenues

 

$

103,941

 

$

60,548

 

$

188,279

 

$

94,328

Cost of sales

 

 

46,444

 

 

38,720

 

 

84,962

 

 

63,362

Gross profit

 

 

57,497

 

 

21,828

 

 

103,317

 

 

30,966

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

7,014

 

 

6,766

 

 

13,838

 

 

13,514

Amortization

 

 

699

 

 

699

 

 

1,397

 

 

1,397

Total operating expenses

 

 

7,713

 

 

7,465

 

 

15,235

 

 

14,911

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

49,784

 

 

14,363

 

 

88,082

 

 

16,055

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

Net interest expense

 

 

2,623

 

 

2,872

 

 

9,928

 

 

5,689

Other expenses

 

 

 

 

5

 

 

 

 

5

Total other expense

 

 

2,623

 

 

2,877

 

 

9,928

 

 

5,694

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

47,161

 

 

11,486

 

 

78,154

 

 

10,361

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

7,351

 

 

209

 

 

8,789

 

 

160

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

39,810

 

$

11,277

 

$

69,365

 

$

10,201

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share – Basic

 

$

0.89

 

$

0.26

 

$

1.55

 

$

0.23

Net income per common share – Diluted

 

$

0.84

 

$

0.24

 

$

1.48

 

$

0.22

Weighted average number of shares outstanding – Basic

 

 

44,960,464

 

 

43,498,908

 

 

44,870,642

 

 

43,426,463

Weighted average number of shares outstanding – Diluted

 

 

47,152,257

 

 

46,418,807

 

 

46,974,441

 

 

45,844,545