Hudson Q1 2024 Earnings Report
Key Takeaways
Hudson Technologies reported a decrease in revenue and operating income for the first quarter of 2024 compared to the same period in 2023. The decline was attributed to lower refrigerant prices and decreased revenue from the DLA contract. Despite the challenges, the company anticipates enhanced visibility around the HFC phasedown and potential benefits from the EPA's proposed Refrigerant Management rule.
Q1 2024 revenues decreased by 15% to $65.3 million compared to $77.2 million in Q1 2023.
Gross margin was 33% in Q1 2024, down from 39% in the prior year period.
Operating income decreased to $12.8 million in Q1 2024 from $22.7 million in Q1 2023.
Net income was $9.6 million, or $0.21 per basic share, compared to $15.5 million, or $0.34 per basic share, in Q1 2023.
Hudson
Hudson
Forward Guidance
Hudson Technologies anticipates full year revenue in the range of $250 to $265 million, with gross margin below the targeted 35% if current pricing levels continue. The company expects to see an increase in sales price for certain refrigerants and achievement of the long-range gross margin target of 35% as supply tightens.
Positive Outlook
- Potential for increased sales prices for certain refrigerants as supply tightens due to the ongoing stepdown in virgin HFC production.
- Opportunity to replenish inventory with lower cost refrigerants during the current lower pricing dynamic.
- EPA's proposed Refrigerant Management rule could mandate the use of reclaimed refrigerants, benefiting Hudson's reclamation technology.
- The phasedown of HFC will ultimately move pricing higher, accelerate reclamation adoption and drive enhanced profitability.
- Hudson is well positioned to benefit from the continued implementation of the AIM Act.
Challenges Ahead
- Difficult comparison to the first quarter of 2023 due to higher sale prices for certain refrigerants and higher volume from the DLA contract.
- Pricing for certain refrigerants declined by approximately 20% compared to pricing levels in the first quarter of 2023.
- Full year revenue may be in the range of $250 to $265 million if current pricing levels continue.
- Gross margin may be below the targeted 35% if current pricing levels continue.
- Company may not meet previously stated 2025 revenue and gross margin targets if the current pricing dynamic continues.