In This Article:
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Revenue: $61.9 million, a 19% decrease from the previous year.
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Gross Margin: 26%, down from 40% in the prior year.
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SG&A Expenses: $8.1 million, up from $6.8 million last year.
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Operating Income: $7 million, compared to $23.1 million in the previous year.
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Net Income: $7.8 million or 17 per diluted share, down from $13.6 million or 29 per diluted share last year.
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Cash Position: $56.5 million with no debt.
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Share Repurchase: $2.6 million in common stock repurchased during the quarter.
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Full Year Revenue Guidance: Expected at the low end of prior guidance range.
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Full Year Gross Margin Guidance: Approximately 28%.
Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Hudson Technologies Inc (NASDAQ:HDSN) achieved solid profitability despite pricing pressures, maintaining a gross margin of 26% for the quarter.
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The company has a strong cash position with $56.5 million in cash and no debt, strengthening its unlevered balance sheet.
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Hudson Technologies Inc (NASDAQ:HDSN) is well-positioned to benefit from the ongoing phase-out of HFCs, which is expected to increase demand for reclaimed refrigerants.
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The EPA's final refrigerant management rule mandates the use of reclaimed refrigerants in certain sectors by 2029, which is seen as a positive step for the company.
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The acquisition of USA Refrigerants is integrating well, providing new customers and additional sources of reclaimed refrigerants.
Negative Points
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Revenue for the third quarter decreased by 19% compared to the previous year, primarily due to lower refrigerant market prices and reduced revenue from the DL A contract.
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Gross margin declined significantly from 40% in the previous year's quarter to 26% in the current quarter, reflecting lower market prices.
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The company adjusted its full-year revenue expectations to the low end of its prior guidance range, with a full-year gross margin expected to be approximately 28%.
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There is concern about the rate of decline in inventory levels, which could lead to a supply-demand imbalance unless a petition is filed with the EPA to lower consumption allowances.
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The depletion rate of 2023 inventory was slower than anticipated, raising concerns about potential lower prices persisting until a significant phase-down step in 2029.
Q & A Highlights
Q: You continue to expect pricing to move higher over time, but with the 2023 inventory being down only 2% year over year, what happens if the EPA does not accelerate the phase-down? A: Brian Coleman, CEO: It's possible that prices could remain lower for longer if the EPA does not accelerate the phase-down. We are concerned about the allowance structure for 2025-2028, which might not decline sufficiently relative to demand. We would support a petition to lower consumption allowances during this period.