Hudson Technologies(US:HDSN)2024-05-08 21:20Part I. Financial Information This section presents the company's unaudited consolidated financial statements and management's analysis for the quarter ended March 31, 2024 Item 1. Financial Statements Q1 2024 unaudited consolidated financial statements show total assets decreased to $294.2 million, liabilities to $55.6 million, revenues to $65.3 million, net income to $9.6 million, and operating cash flow turned negative at $0.9 million Consolidated Balance Sheets This section presents the company's consolidated balance sheets as of March 31, 2024, and December 31, 2023 Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $10,551 | $12,446 | | Inventories | $147,759 | $154,450 | | Total current assets | $203,484 | $204,995 | | Goodwill | $47,803 | $47,803 | | Total Assets | $294,163 | $296,672 | | Liabilities & Equity | | | | Total current liabilities | $47,358 | $58,551 | | Total Liabilities | $55,552 | $67,899 | | Retained earnings | $119,789 | $110,227 | | Total Stockholders' Equity | $238,611 | $228,773 | Consolidated Statements of Income This section details the company's consolidated statements of income for the three months ended March 31, 2024 and 2023 Consolidated Income Statement Highlights (in thousands, except per share amounts) | Metric | Q1 2024 | Q1 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenues | $65,250 | $77,199 | -15.5% | | Gross profit | $21,421 | $30,330 | -29.4% | | Operating income | $12,776 | $22,655 | -43.6% | | Net income | $9,562 | $15,531 | -38.4% | | Diluted EPS | $0.20 | $0.33 | -39.4% | Consolidated Statements of Stockholders' Equity This section outlines changes in the company's consolidated stockholders' equity for the quarter ended March 31, 2024 - Total Stockholders' Equity increased to $238.6 million as of March 31, 2024, up from $228.8 million at the beginning of the year, primarily driven by net income of $9.6 million for the quarter13 Consolidated Statements of Cash Flows This section presents the company's consolidated statements of cash flows for the three months ended March 31, 2024 and 2023 Consolidated Cash Flow Highlights (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(933) | $10,666 | | Net cash used in investing activities | $(960) | $(412) | | Net cash used in financing activities | $(2) | $(3,227) | | Increase (decrease) in cash | $(1,895) | $7,027 | Notes to the Consolidated Financial Statements This section provides detailed explanatory notes to the company's consolidated financial statements - The company operates as a single reportable segment focused on refrigerant services, including sales, reclamation, and on-site services, with its business subject to AIM Act regulations mandating HFC refrigerant phase-down, making reclamation critical for future supply171822 - In Q1 2024, one customer accounted for over 10% of revenues, with an outstanding accounts receivable balance of $11.9 million at quarter-end30 Revenue by Type (in thousands) | Revenue Type | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Product and related sales | $63,811 | $75,983 | | RefrigerantSide ® Services | $1,439 | $1,216 | | Total | $65,250 | $77,199 | - As of March 31, 2024, the company had no outstanding balance on its $75 million revolving credit facility, having fully repaid its Term Loan Facility and FILO Tranche in the third quarter of 202396107158 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 2024 revenues decreased 15% to $65.3 million due to lower prices, gross margin contracted as cost of sales rose to 67%, and net income fell to $9.6 million, with working capital at $156.1 million - Revenues for Q1 2024 decreased by 15% year-over-year, mainly due to lower selling prices of certain refrigerants124 - Cost of sales as a percentage of revenue increased from 61% in Q1 2023 to 67% in Q1 2024, driven by the sale of higher-cost inventory125 - Interest expense dropped significantly to $0.2 million in Q1 2024 from $1.8 million in Q1 2023, following the full repayment of the Term Loan Facility in Q3 2023127 - Net cash used in operating activities was $0.9 million, a stark contrast to the $10.7 million provided by operating activities in the prior-year period, mainly due to payments of accounts payable and timing of receivables and inventory133 - The company's business is seasonal, with peak sales typically occurring in the first nine months of the year, and unseasonably cool weather can adversely affect demand for refrigerants156 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rate fluctuations on variable-rate debt and volatility in refrigerant demand, price, and availability - The company is exposed to interest rate risk on its Amended Wells Fargo Facility, although there was no outstanding balance as of March 31, 2024158 - Significant market risk exists from fluctuations in the demand, price, and availability of refrigerants, which could lead to reduced revenues or inventory write-downs159 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report160 - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, these controls161 Part II. Other Information This section provides additional information not covered in the financial statements, including risk factors and exhibits Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's Form 10-K for the year ended December 31, 2023, were reported - The company states there have been no material changes to the risk factors disclosed in its Annual Report on Form 10-K for the year ended December 31, 2023164 Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended March 31, 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2024165 Item 6. Exhibits The report includes exhibits such as CEO and CFO certifications under Sarbanes-Oxley Act and Interactive Data Files - Exhibits filed with the report include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as Interactive Data Files (XBRL)166