Hudson Technologies Inc. (HDSN) filed Quarterly Report for the period ended 2009-09-30.
Hudson Technologies Inc. is a leading provider of innovative solutions to recurring problems within the refrigeration industry. Hudson's proprietary RefrigerantSide Services increase operating efficiency and energy savings and remove moisture oils and other contaminants frequently found in the refrigeration circuits of large comfort cooling and process refrigeration systems. Performed at a customer's site as an integral part of an effective scheduled maintenance program or in response to emergencies RefrigerantSide Services offer significant savings to customers due to their ability to be completed rapidly and at higher purity levels and can be utilized while the customer's system continues to operate. In addition the Company sells refrigerants and provides traditional reclamation services to the commercial and industrial air conditioning and refrigeration markets. Hudson Technologies Inc. has a market cap of $23.3 million; its shares were traded at around $1.2 with a P/E ratio of 13.3 and P/S ratio of 0.7.
Highlight of Business Operations:
Revenues for the three month period ended September 30, 2009 were $6,499,000, an increase of $658,000 or 11% from the $5,841,000 reported during the comparable 2008 period. The increase in revenues was primarily attributable to an increase in refrigerant revenues of $798,000 and a decrease in RefrigerantSide® Services revenues of $140,000. The increase in refrigerant revenues is primarily related to an increase in the number of pounds of certain refrigerant sold, partially offset by a decrease in the price per pound of refrigerant sold. The decrease in RefrigerantSide® Services was attributable to a decrease in the numbers of jobs completed when compared to the same period of 2008.
Revenues for the nine month period ended September 30, 2009 were $21,398,000, a decrease of $8,898,000 or 29% from the $30,296,000 reported during the comparable 2008 period. The decrease in revenues was primarily attributable to a decrease in refrigerant revenues of $8,590,000 and a decrease in RefrigerantSide® Services revenues of $308,000. The decrease in refrigerant revenues is primarily related to a decrease in the number of pounds of certain refrigerant sold. The decrease in RefrigerantSide® Services was attributable to a decrease in the numbers of jobs completed when compared to the same period of 2008.
Other income (expense) for the nine month period ended September 30, 2009 was ($1,138,000), compared to the ($865,000) reported during the comparable 2008 period. Other income (expense) includes interest expense of $1,138,000 and $868,000 for the comparable 2009 and 2008 periods, respectively. The increase in interest expense is primarily attributed to an increase in outstanding indebtedness.
Inventory and trade receivables are principal components of current assets. At September 30, 2009, the Company had inventories of $14,270,000 a decrease of $9,343,000 from the $23,613,000 at December 31, 2008. The decrease in the inventory balance is due to the timing and availability of inventory purchases and the sale of refrigerants. The Company's ability to sell and replace its inventory on a timely basis and the prices at which it can be sold are subject, among other things, to current market conditions and the nature of supplier or customer arrangements and the Company's ability to source CFC based refrigerants, which are no longer being manufactured or non-CFC based refrigerants. At September 30, 2009, the Company had trade receivables, net of allowance for doubtful accounts of $3,030,000 an increase of $1,299,000 from the $1,731,000 at December 31, 2008. The Company's trade receivables are concentrated with various wholesalers, brokers, contractors and end-users within the refrigeration industry that are primarily located in the continental United States.
(1) The contractual cash obligations included in the table includes both principal and estimated interest payments. The estimated interest payments on revolving debt are based primarily on the interest rates in effect and the outstanding revolving debt obligation as September 30, 2009. (2) Long and short term debt and capital lease obligations include payment of obligations of outstanding principal amounts of debt as of September 30, 2009 and estimated future interest payments on the outstanding principal amounts under the Company's credit facility which expires on June 20, 2011. On June 26, 2007, Hudson, through HTC, entered into the Facility with and Keltic and on April 17, 2008, the Facility with Keltic was amended to secure the participation of Bridge and to provide for borrowings of up to $15,000,000. On September 23, 2009, Keltic advised the Company that it had acquired all of Bridge's rights under the Facility. The Facility consists of a revolving line of credit and term loans, which expires on June 20, 2011. Advances under the revolving line of credit are limited to (i) 85% of eligible trade accounts receivable and (ii) 55% of eligible inventory. Advances available to Hudson under the A and B term loans may not exceed $2,500,000 and $4,500,000, respectively. At September 30, 2009, the Facility bore interest at 6.5%. Substantially all of Hudson's assets are pledged as collateral for its obligations under the Facility. In addition, among other things, the loan agreement restricts Hudson's ability to declare or pay any cash dividends on its capital stock. As of September 30, 2009, Hudson had $3,900,000 of borrowings outstanding and $3,000,000 available for borrowing under the revolving line of credit. In addition, as of September 30, 2009, Hudson had $4,750,000 of borrowings outstanding under the A and B term loans.
An initial closing of the Offering was held on August 5, 2009, at which time, Hudson sold 1,470,000 shares of its common stock at $1.15 per share and received net proceeds of approximately $1,400,000 and no other closings were completed. As placement agent for the Offering, Roth received $101,000 and a warrant to purchase 73,500 shares of common stock at an exercise price of $1.4375 per share, plus reimbursement of its expenses of $56,000. The estimated fair value of the warrant was approximately $48,000 and such warrant was charged to additional paid in capital as compensation expense to Roth. As of October 1, 2009, the Company discontinued, and ceased pursuing future sales under, the Offering.
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