Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hudson Technologies Inc (HDSN, Financial) reported a strong demand for refrigerants with a 17% increase in volume over the previous year.
- The company has successfully acquired USA Refrigerants, which is expected to enhance their capabilities in recovery and reclamation.
- Hudson Technologies Inc (HDSN) has initiated a share repurchase program of up to $10 million, reflecting confidence in its long-term growth prospects.
- The company ended the period with no debt and a strong liquidity position of $89.5 million, supporting its operational and strategic needs.
- Hudson Technologies Inc (HDSN) is well-positioned to benefit from the anticipated federal mandates for the use of reclaimed refrigerants, which could drive future growth.
Negative Points
- The company experienced a 17% decrease in revenues compared to the same period last year, primarily due to decreased selling prices for certain refrigerants.
- Pricing pressure led to a decline in gross margin from 41% in the second quarter of 2023 to 30% in the second quarter of 2024.
- Hudson Technologies Inc (HDSN) faced a challenging pricing environment, with a 25% decline in the price of certain refrigerants compared to the previous year.
- The company's net income decreased significantly from $19.2 million in the second quarter of 2023 to $9.6 million in the second quarter of 2024.
- There were $700,000 in non-recurring expenses related to the acquisition of USA Refrigerants and IT projects, impacting the company's SG&A expenses.
Q & A Highlights
Q: Can you break down the 17% volume increase in the quarter and explain any shifts throughout the summer selling season?
A: Brian Coleman, CEO: The volume was flat in Q1, but we saw strong interest in Q2. The 17% increase may not represent the entire nine-month sales season, but we expect growth over last year throughout the balance of 2024 compared to 2023.
Q: What are your thoughts on the US Department of Commerce's decision to enforce duties on HFC blends from China, and its potential impact on the market?
A: Brian Coleman, CEO: We support the decision against bad actors circumventing rules. The financial burden from duties could impact those who imported gas unfairly. The full impact will be clearer in the coming months.
Q: How much revenue from the USA Refrigerants acquisition is included in the revised guidance?
A: Brian Coleman, CEO: We haven't included much revenue from USA Refrigerants in the guidance. The focus is on buying refrigerants, which will go into inventory for sales next year. There is potential upside if we achieve more sales in the next three months.
Q: Has pricing changed since the circumvention rules were determined?
A: Brian Coleman, CEO: We haven't seen material pricing changes related to the case. Companies that circumvented tariffs may face significant financial implications, but the impact on pricing is yet to be seen.
Q: What is the strategy behind the acquisition team from USA Refrigerants, and how will they drive increased reclaim activity?
A: Brian Coleman, CEO: The USA team has strong expertise in sourcing recovered refrigerants due to limited access to virgin supplies. They have a strong reputation and will help integrate buying with selling, enhancing our reclaim activity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
