Hudson Technologies(US:HDSN)2024-05-02 00:58Financial Data and Key Metrics Changes - The company recorded net income of $9.6 million or $0.21 per basic and $0.20 per diluted share in Q1 2024, compared to net income of $15.5 million or $0.34 per basic and $0.33 per diluted share in Q1 2023, indicating a decrease in profitability [9][83] - Revenues for Q1 2024 were $65.3 million, a decrease of 15% compared to $77.2 million in Q1 2023, primarily due to decreased selling prices for certain refrigerants and lower revenue from the DLA contract [83] - Gross margin was 33% for Q1 2024, down from 39% in Q1 2023, reflecting the impact of lower pricing [83] Business Line Data and Key Metrics Changes - SG&A expenses increased to $7.9 million in Q1 2024 from $7 million in Q1 2023, attributed to investments in personnel and IT costs [61] - Operating income decreased to $12.8 million in Q1 2024 from $22.7 million in Q1 2023, indicating a significant decline in operational profitability [61] Market Data and Key Metrics Changes - Pricing for certain refrigerants declined by approximately 20% compared to Q1 2023, with HFC prices currently around $8 per pound [55] - The company expects full-year revenue in the range of $250 million to $265 million, with gross margin below the targeted 35% due to ongoing pricing pressures [56] Company Strategy and Development Direction - The company maintains a positive long-term view for significantly higher sales prices and profitability driven by the AIM Act, despite challenges in 2024 [11] - The company is focused on promoting the practice of refrigerant recovery and transitioning to more efficient and environmentally friendly cooling technologies [58][80] - The company is exploring acquisition opportunities, particularly in the contractor space, to enhance its growth strategy [26][96] Management's Comments on Operating Environment and Future Outlook - Management noted that the current pricing dynamic is viewed as temporary, with expectations of higher prices in the future as supply tightens [4][5] - The proposed Refrigerant Management rule is anticipated to create a pricing differential between reclaimed and virgin refrigerants, potentially leading to higher prices for reclaimed refrigerants [58][74] - Management expressed confidence in the company's strong liquidity and financial flexibility as it navigates the ongoing implementation of the AIM Act [10][79] Other Important Information - Stockholders' equity improved to $238.6 million as of March 31, 2024, compared to $228.8 million at the end of 2023 [62] - The company has strong liquidity with $82.5 million in cash and revolver availability as of March 31, 2024 [62] Q&A Session Summary Question: What are the main causes for the lackluster pricing to start the season? - Management indicated that pricing is being affected by stockpiles and expects warmer weather to create further demand [90] Question: What was DLA revenue in the quarter? - DLA revenue was approximately $8 million for the quarter, which is $5 million lower than the previous year [91] Question: Does the lower HFC pricing make M&A more attractive? - Management acknowledged that the current environment may provide better pricing for potential acquisitions, particularly in the contractor space [96] Question: Why not buy back stock instead of pursuing acquisitions? - Management explained that current asset-based lending (ABL) restrictions preclude stock buybacks, but they may seek a waiver from lenders [106]