Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the
third quarter and nine months ended September 30, 2020.
For the quarter ended September 30, 2020, Hudson
reported revenues of $41.5 million, a decrease of 9% compared to
revenues of $45.6 million in the comparable 2019 period. The
decrease is primarily due to a decline in volume, as the continued
COVID-19 pandemic and the associated closures of public venues such
as office buildings, gyms, schools and universities across the U.S.
negatively impacted the Company’s end markets and overall demand
for refrigerants. Gross margin in the third quarter of 2020 was
22%, compared to 17% in the third quarter of 2019. The Company
reported operating income of $2.1 million for the third quarter of
2020 compared to an operating loss of $1.2 million in the third
quarter of 2019. The Company recorded net income of $39,000 or
$0.00 per basic and diluted share in the third quarter of 2020,
compared to net income of $2.7 million or $0.06 per basic and
diluted share in the same period of 2019. During the third quarter
of 2019, the Company received $8.9 million in proceeds from the
working capital settlement arising from the acquisition of Aspen
Refrigerants, Inc. (“ARI”), which led to the net profit in that
quarter. Hudson recorded non-GAAP Adjusted EBITDA of $4.6 million
in the third quarter of 2020 compared to Adjusted EBITDA of $3.9
million in the third quarter of 2019. (Adjusted EBITDA is a
non-GAAP financial measure - see the description of Adjusted EBITDA
and tabular Reconciliation of Net Income (Loss) to Adjusted EBITDA
in the supplemental table included at the end of this release).
For the nine months ended September 30,
2020, Hudson reported revenues of $125.5 million, a decrease of 8%
compared to $136.3 million in the first nine months of 2019. The
decrease in revenue was primarily due to decreased volume, related
to the pandemic-driven closures described above. Gross margin for
the first nine months of 2020 improved to 24% compared to gross
margin of 9% for the same period in 2019. The Company reported
operating income of $7.7 million for the first nine months of 2020
compared to an operating loss of $11.0 million in the first nine
months of 2019. The Company’s net loss for the first nine months of
2020 was $0.5 million, or ($0.01) per basic and diluted share,
compared to a net loss of $15.2 million, or ($0.36) per basic and
diluted share, in the first nine months of 2019, which included a
$9.2 million non-cash inventory adjustment offset by the $8.9
settlement proceeds described above. For the first nine months of
2020, Hudson recorded non-GAAP Adjusted EBITDA of $15.7 million
compared to Adjusted EBITDA of $9.9 million in the first nine
months of 2019. For the trailing twelve months ended September 30,
2020, Hudson recorded non-GAAP Adjusted EBITDA of $14.9 million, a
75% increase from the $8.5 million of Adjusted EBITDA recorded
during the trailing twelve months ended September 30, 2019.
(Adjusted EBITDA is a non-GAAP financial measure - see the
description of Adjusted EBITDA and tabular Reconciliation of Net
Income (Loss) to Adjusted EBITDA in the supplemental table included
at the end of this release).
Brian F. Coleman, President and Chief Executive
Officer of Hudson Technologies commented, “Our third quarter
performance was largely consistent with our expectations as we, and
the rest of our industry, continued to contend with demand declines
associated with the ongoing closure of many public venues across
the U.S. Given the selling environment, we’re pleased to have
achieved improved gross margin, increased operating income and
breakeven profitability in the third quarter. Moreover, we repaid
$16.5 million of debt during the third quarter of 2020, and as of
September 30, 2020, we have fully paid down our revolver, while
increasing our cash balance to $9.2 million. As of September 30,
2020, our overall availability, which includes our cash balance and
revolver availability, was $41.7 million, which will provide
financial flexibility for the fourth quarter and beyond.
“As we move through the final months of 2020, we
remain focused on continuing to navigate the uncertainties of this
pandemic. Historically, the fourth quarter is typically our
quietest quarter, one in which we plan our operational strategy to
anticipate and meet the needs of our customers for the following
year’s cooling season. We are optimistic that 2021 will bring more
consistent re-openings for businesses and schools and we are
planning accordingly so that Hudson is well positioned to help meet
potential demand as more cooling systems are turned back on. We
remain committed to protecting the health and safety of our
employees while also maintaining our product supply for our
customers across all channels.”
Conference Call Information
The Company will host a conference call and
webcast to discuss the third quarter results today, November 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)
602-0380 approximately five minutes prior to the scheduled start
time. International callers please dial (862) 298-0970.
A replay of the teleconference will be available
until December 5, 2020 and may be accessed by dialing (877)
481-4010. International callers may dial (919) 882-2331. Callers
should use conference ID: 38281.
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: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
Subsidiaries Consolidated Balance
Sheets(Amounts in thousands, except for share and par
value amounts)
|
|
September 30, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
(unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
9,235 |
|
|
$ |
2,600 |
|
Trade accounts receivable – net |
|
|
14,703 |
|
|
|
8,061 |
|
Inventories – net |
|
|
40,374 |
|
|
|
59,238 |
|
Prepaid expenses and other current assets |
|
|
3,540 |
|
|
|
4,525 |
|
Total current
assets |
|
|
67,852 |
|
|
|
74,424 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment,
less accumulated depreciation |
|
|
21,435 |
|
|
|
23,674 |
|
Goodwill |
|
|
47,803 |
|
|
|
47,803 |
|
Intangible assets, less
accumulated amortization |
|
|
23,865 |
|
|
|
26,012 |
|
Right of use asset |
|
|
6,719 |
|
|
|
8,048 |
|
Other assets |
|
|
85 |
|
|
|
192 |
|
Total
Assets |
|
$ |
167,759 |
|
|
$ |
180,153 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
9,534 |
|
|
$ |
10,274 |
|
Accrued expenses and other current liabilities |
|
|
19,414 |
|
|
|
18,120 |
|
Accrued payroll |
|
|
1,574 |
|
|
|
724 |
|
Short-term debt |
|
|
— |
|
|
|
14,000 |
|
Current maturities of long-term debt |
|
|
6,903 |
|
|
|
3,008 |
|
Total current
liabilities |
|
|
37,425 |
|
|
|
46,126 |
|
Deferred tax liability |
|
|
1,297 |
|
|
|
1,192 |
|
Long-term lease liabilities |
|
|
4,335 |
|
|
|
5,742 |
|
Long-term debt, less current maturities |
|
|
79,492 |
|
|
|
81,982 |
|
Total
Liabilities |
|
|
122,549 |
|
|
|
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 42,664,274 at September 30, 2020 and
42,628,560 at December 31, 2019 |
|
|
426 |
|
|
|
426 |
|
Additional paid-in capital |
|
|
118,116 |
|
|
|
117,557 |
|
Accumulated deficit |
|
|
(73,332 |
) |
|
|
(72,872 |
) |
Total Stockholders’
Equity |
|
|
45,210 |
|
|
|
45,111 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders’ Equity |
|
$ |
167,759 |
|
|
$ |
180,153 |
|
3
Hudson Technologies, Inc. and
SubsidiariesConsolidated Statements of
Operations(unaudited)
(Amounts in thousands, except for share and per
share amounts)
|
|
Three months
ended September 30, |
|
|
Nine monthsended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Revenues |
|
$ |
41,468 |
|
|
$ |
45,631 |
|
|
$ |
125,495 |
|
|
$ |
136,306 |
|
Cost of
sales |
|
|
32,512 |
|
|
|
37,849 |
|
|
|
95,511 |
|
|
|
123,905 |
|
Gross
profit |
|
|
8,956 |
|
|
|
7,782 |
|
|
|
29,984 |
|
|
|
12,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
6,162 |
|
|
|
8,282 |
|
|
|
20,184 |
|
|
|
21,154 |
|
Amortization |
|
|
715 |
|
|
|
742 |
|
|
|
2,147 |
|
|
|
2,216 |
|
Total operating expenses |
|
|
6,877 |
|
|
|
9,024 |
|
|
|
22,331 |
|
|
|
23,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
2,079 |
|
|
|
(1,242 |
) |
|
|
7,653 |
|
|
|
(10,969 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense |
|
|
(2,966 |
) |
|
|
(4,447 |
) |
|
|
(9,412 |
) |
|
|
(12,921 |
) |
Other income |
|
|
1,000 |
|
|
|
8,904 |
|
|
|
1,011 |
|
|
|
9,412 |
|
Total other (expense)
income |
|
|
(1,966 |
) |
|
|
4,457 |
|
|
|
(8,401 |
) |
|
|
(3,509 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
|
113 |
|
|
|
3,215 |
|
|
|
(748 |
) |
|
|
(14,478 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit) |
|
|
74 |
|
|
|
548 |
|
|
|
(288 |
) |
|
|
691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
39 |
|
|
$ |
2,667 |
|
|
$ |
(460 |
) |
|
$ |
(15,169 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common
share – Basic |
|
$ |
0.00 |
|
|
$ |
0.06 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.36 |
) |
Net income (loss) per common
share – Diluted |
|
$ |
0.00 |
|
|
$ |
0.06 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.36 |
) |
Weighted average number of
shares outstanding – Basic |
|
|
42,656,510 |
|
|
|
42,618,391 |
|
|
|
42,637,945 |
|
|
|
42,608,396 |
|
Weighted average number of
shares outstanding – Diluted |
|
|
43,680,265 |
|
|
|
42,618,391 |
|
|
|
42,637,945 |
|
|
|
42,608,396 |
|
Hudson Technologies, Inc. and
SubsidiariesSupplemental Table to
Reconcile Net Income
(Loss) to Adjusted
EBITDA(unaudited)(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTM |
|
Adjusted
EBITDA |
|
Three months ended September
30, |
|
|
Nine months ended September
30, |
|
|
Twelve months ended September
30 |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
39 |
|
|
|
2,667 |
|
|
|
(460 |
) |
|
|
(15,169 |
) |
|
|
(11,231 |
) |
|
|
(23,276 |
) |
Income tax expense
(benefit) |
|
|
74 |
|
|
|
548 |
|
|
|
(288 |
) |
|
|
691 |
|
|
|
(323 |
) |
|
|
762 |
|
Interest expense |
|
|
2,966 |
|
|
|
4,447 |
|
|
|
9,412 |
|
|
|
12,921 |
|
|
|
15,402 |
|
|
|
17,060 |
|
Depreciation expense |
|
|
1,079 |
|
|
|
1,081 |
|
|
|
3,235 |
|
|
|
3,235 |
|
|
|
4,185 |
|
|
|
4,270 |
|
Amortization expense |
|
|
715 |
|
|
|
742 |
|
|
|
2,147 |
|
|
|
2,216 |
|
|
|
2,862 |
|
|
|
2,964 |
|
EBITDA |
|
|
4,873 |
|
|
|
9,485 |
|
|
|
14,046 |
|
|
|
3,894 |
|
|
|
10,895 |
|
|
|
1,780 |
|
Other Income |
|
|
(1,000 |
) |
|
|
(8,904 |
) |
|
|
(1,011 |
) |
|
|
(9,412 |
) |
|
|
(1,011 |
) |
|
|
(9,412 |
) |
Stock compensation
expense |
|
|
226 |
|
|
|
272 |
|
|
|
559 |
|
|
|
900 |
|
|
|
1,487 |
|
|
|
1,668 |
|
Lower of cost or net
realizable value adjustment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9,202 |
|
|
|
- |
|
|
|
9,202 |
|
Nonrecurring expenses |
|
|
520 |
|
|
|
3,059 |
|
|
|
2,093 |
|
|
|
5,270 |
|
|
|
3,559 |
|
|
|
5,270 |
|
Adjusted EBITDA |
|
|
4,619 |
|
|
|
3,912 |
|
|
|
15,687 |
|
|
|
9,854 |
|
|
|
14,930 |
|
|
|
8,508 |
|
Non-GAAP Financial
Measures
In addition to its reported results,
the Company has included in this earnings release Adjusted EBITDA,
which the Securities and Exchange Commission (SEC) defines as a
"non-GAAP financial measure." Management believes that such
non-GAAP financial measure, when read in conjunction with the
Company's reported results, can provide useful supplemental
information for investors analyzing period to period comparisons of
the Company's operating results. We define Adjusted EBITDA as
follows:
Adjusted EBITDA is a non-GAAP
financial measure that represents Net income (loss) attributable to
the Company’s common shareholders plus or minus income tax expense
(benefit), plus interest expense, depreciation and amortization,
other income, stock compensation, lower of cost or net realizable
value adjustment, and non-recurring expenses (which primarily
includes professional fees not incurred in the ordinary course of
business).
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