Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the
second quarter and six months ended June 30, 2020.
For the quarter ended June 30, 2020, Hudson
reported revenues of $47.7 million, a decrease of 14.8% compared to
revenues of $56.0 million in the comparable 2019 period. The
decrease is primarily due to a decline in volume, partially offset
by an increase in selling price, of certain refrigerants sold
during the second quarter of 2020, compared to the second quarter
of 2019. Gross margin in the second quarter of 2020 was
26.6%, compared to negative gross margin in the second quarter of
2019. The Company reported operating income of $5.2 million for the
second quarter of 2020 compared to an operating loss of $10.0
million in the second quarter of 2019. During the second
quarter of 2019 the Company recorded a lower of cost or net
realizable value adjustment to its inventory of $9.2 million,
mainly due to declines in selling prices of certain refrigerants at
that time. The Company recorded net income of $2.4 million or
$0.06 per basic and diluted share in the second quarter of 2020,
compared to a net loss of $13.8 million or ($0.32) per basic and
diluted share in the same period of 2019.
For the six months ended June 30, 2020, Hudson
reported revenues of $84.0 million, a decrease of 7.4% compared to
$90.7 million in the first six months of 2019. The decrease
in revenue was primarily due to decreased volume, partially offset
by increased pricing of certain refrigerants. Gross margin
for the first six months of 2020 improved to 25.0% compared to
gross margin of 5.1% in the first half of 2019. The Company
reported operating income of $5.6 million for the first six months
of 2020 compared to an operating loss of $9.7 million in the same
period of 2019. The Company’s net loss for the first six
months of 2020 was $0.5 million, or ($0.01) per basic and diluted
share, compared to a net loss of $17.8 million, or ($0.42) per
basic and diluted share, in the first half of 2019, which included
the above mentioned $9.2 million non-cash inventory adjustment.
Brian F. Coleman, President and Chief Executive
Officer of Hudson Technologies commented, “We were pleased to
deliver solid second quarter results, particularly as we continue
to navigate the challenging landscape associated with the COVID-19
virus and the associated impact to our economy. During the
quarter, the closures to public venues, such as office buildings,
recreation centers, schools and universities across the U.S.
impacted end markets and demand for refrigerants. While pricing
remained consistent in the quarter, volume declines adversely
impacted our overall revenues. Nonetheless, we delivered
improved gross margin for the quarter, achieved solid operating
income and returned to profitability.
“There are still many uncertainties associated
with this pandemic and we remain focused on the elements of our
business that we can control: protecting the health and safety of
our employees and keeping our products in supply to best serve our
customers across all channels. We’ve been in this business
for more than thirty years, and our ability to adapt to changing
economic and industry landscapes while executing our operational
strategy is a strength we continue to rely upon. Despite the
challenging market environment, Hudson generated over $6 million of
operating cash flow during the second quarter of 2020. The
Company’s financial position and liquidity remain strong, with
total liquidity at June 30, 2020 of approximately $39 million,
which includes cash and revolver availability. Finally, as
announced in an 8-K this past Monday, we’ve met certain performance
targets set forth in our Credit Agreement, and as a result of this
achievement, we have terminated the services of our Chief
Restructuring Officer.
“As you know, in late June, our Company suffered
the unexpected loss of our founder Kevin J. Zugibe, P.E. He
was an industry pioneer who brought remarkable passion, expertise
and energy to Hudson, and he is greatly missed. In his years
building the Company, Kevin recognized the importance of
establishing a strong management team to drive and support Hudson’s
growth. All of our employees are committed to continuing to
grow and execute on Kevin’s legacy, and as one of Kevin’s
longstanding partners for over 20 years, I can assure you that we
are focused on our Company’s success as we move through the coming
months and years,” Mr. Coleman concluded.
Conference Call Information
The Company will host a conference call and
webcast to discuss the second quarter results today, August 5, 2020
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 (844)
407-9500 approximately five minutes prior to the scheduled start
time. International callers please dial (862) 298-0850.
A replay of the teleconference will be available
until September 4, 2020 and may be accessed by dialing (877)
481-4010. International callers may dial (919) 882-2331.
Callers should use conference ID: 35826.
About Hudson Technologies
Hudson Technologies, Inc. is a leading provider
of innovative and sustainable solutions for optimizing performance
and enhancing reliability of commercial and industrial chiller
plants and refrigeration systems. Hudson's proprietary
RefrigerantSide® Services increase operating efficiency, provide
energy and cost savings, reduce greenhouse gas emissions and the
plant’s carbon footprint while enhancing system life and
reliability of operations at the same time. RefrigerantSide®
Services can be performed at a customer's site as an integral part
of an effective scheduled maintenance program or in response to
emergencies. Hudson also offers SMARTenergy OPS®, which is a
cloud-based Managed Software as a Service for continuous
monitoring, Fault Detection and Diagnostics and real-time
optimization of chilled water plants. In addition, the Company
sells refrigerants and provides traditional reclamation services
for commercial and industrial air conditioning and refrigeration
uses. For further information on Hudson, please visit the Company's
web site at www.hudsontech.com.
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, 2019 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: |
Company Contact: |
|
John Nesbett/Jennifer Belodeau |
Brian F. Coleman, President & CEO |
|
IMS Investor Relations |
Hudson Technologies, Inc. |
|
(203) 972-9200 |
(845) 735-6000 |
|
jnesbett@institutionalms.com |
bcoleman@hudsontech.com |
Hudson Technologies, Inc. and
SubsidiariesConsolidated Balance
Sheets
(Amounts in thousands, except for share and par
value amounts)
|
|
|
June 30, |
|
|
December 31, |
|
|
|
|
2020 |
|
|
2019 |
|
| |
|
(unaudited) |
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
| Current
assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,850 |
|
|
$ |
2,600 |
|
|
Trade accounts receivable – net |
|
|
25,317 |
|
|
|
8,061 |
|
|
Inventories – net |
|
|
48,570 |
|
|
|
59,238 |
|
|
Prepaid expenses and other current assets |
|
|
3,622 |
|
|
|
4,525 |
|
| Total current
assets |
|
|
85,359 |
|
|
|
74,424 |
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment,
less accumulated depreciation |
|
|
22,108 |
|
|
|
23,674 |
|
| Goodwill |
|
|
47,803 |
|
|
|
47,803 |
|
| Intangible assets, less
accumulated amortization |
|
|
24,580 |
|
|
|
26,012 |
|
| Right of use asset |
|
|
7,205 |
|
|
|
8,048 |
|
| Other assets |
|
|
180 |
|
|
|
192 |
|
| Total
Assets |
|
$ |
187,235 |
|
|
$ |
180,153 |
|
| |
|
|
|
|
|
|
|
|
| Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
| Current
liabilities: |
|
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
12,140 |
|
|
$ |
10,274 |
|
|
Accrued expenses and other current liabilities |
|
|
19,985 |
|
|
|
18,120 |
|
|
Accrued payroll |
|
|
1,537 |
|
|
|
724 |
|
|
Short-term debt |
|
|
15,931 |
|
|
|
14,000 |
|
|
Current maturities of long-term debt |
|
|
5,743 |
|
|
|
3,008 |
|
| Total current
liabilities |
|
|
55,336 |
|
|
|
46,126 |
|
|
Deferred tax liability |
|
|
1,238 |
|
|
|
1,192 |
|
|
Long-term lease liabilities |
|
|
4,710 |
|
|
|
5,742 |
|
|
Long-term debt, less current maturities |
|
|
81,006 |
|
|
|
81,982 |
|
| Total
Liabilities |
|
|
142,290 |
|
|
|
135,042 |
|
| |
|
|
|
|
|
|
|
|
| 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 42,628,560 at June 30, 2020 and
December 31, 2019 |
|
|
426 |
|
|
|
426 |
|
|
Additional paid-in capital |
|
|
117,890 |
|
|
|
117,557 |
|
|
Accumulated deficit |
|
|
(73,371 |
) |
|
|
(72,872 |
) |
| Total Stockholders’
Equity |
|
|
44,945 |
|
|
|
45,111 |
|
| |
|
|
|
|
|
|
|
|
| Total Liabilities and
Stockholders’ Equity |
|
$ |
187,235 |
|
|
$ |
180,153 |
|
| |
|
|
|
|
|
|
|
|
Hudson Technologies, Inc. and
SubsidiariesConsolidated Statements of
Operations(unaudited)(Amounts in
thousands, except for share and per share amounts)
|
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
Revenues |
|
$ |
47,677 |
|
|
$ |
56,011 |
|
|
$ |
84,027 |
|
|
$ |
90,675 |
|
| Cost of
sales |
|
|
34,996 |
|
|
|
58,377 |
|
|
|
62,999 |
|
|
|
86,056 |
|
| Gross profit
(loss) |
|
|
12,681 |
|
|
|
(2,366 |
) |
|
|
21,028 |
|
|
|
4,619 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
6,757 |
|
|
|
6,848 |
|
|
|
14,022 |
|
|
|
12,872 |
|
|
Amortization |
|
|
716 |
|
|
|
753 |
|
|
|
1,432 |
|
|
|
1,474 |
|
|
Total operating expenses |
|
|
7,473 |
|
|
|
7,601 |
|
|
|
15,454 |
|
|
|
14,346 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income
(loss) |
|
|
5,208 |
|
|
|
(9,967 |
) |
|
|
5,574 |
|
|
|
(9,727 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense |
|
|
(3,132 |
) |
|
|
(4,267 |
) |
|
|
(6,446 |
) |
|
|
(8,474 |
) |
|
Other income |
|
|
8 |
|
|
|
508 |
|
|
|
11 |
|
|
|
508 |
|
| Total other
expense |
|
|
(3,124 |
) |
|
|
(3,759 |
) |
|
|
(6,435 |
) |
|
|
(7,966 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) before
income taxes |
|
|
2,084 |
|
|
|
(13,726 |
) |
|
|
(861 |
) |
|
|
(17,693 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax (benefit)
expense |
|
|
(302 |
) |
|
|
71 |
|
|
|
(362 |
) |
|
|
143 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income
(loss) |
|
$ |
2,386 |
|
|
$ |
(13,797 |
) |
|
$ |
(499 |
) |
|
$ |
(17,836 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income(loss) per common
share – Basic |
|
$ |
0.06 |
|
|
$ |
(0.32 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.42 |
) |
| Net income(loss) per common
share – Diluted |
|
$ |
0.06 |
|
|
$ |
(0.32 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.42 |
) |
| Weighted average number of
shares outstanding – Basic |
|
|
42,628,560 |
|
|
|
42,604,189 |
|
|
|
42,628,560 |
|
|
|
42,603,315 |
|
| Weighted average number of
shares outstanding – Diluted |
|
|
42,917,562 |
|
|
|
42,604,189 |
|
|
|
42,628,560 |
|
|
|
42,603,315 |
|
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