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Sep 30, 2021
Hudson Q3 2021 Earnings Report
Hudson's revenue increased due to higher selling prices, leading to substantial revenue growth and enhanced profitability.
Key Takeaways
Hudson Technologies reported a strong third quarter with a 46% increase in revenue, driven by higher selling prices of refrigerants. The company saw significant improvements in gross margin and operating income, resulting in a net income of $15.9 million, a substantial increase compared to the previous year.
Revenue increased by 46% to $60.6 million compared to Q3 2020.
Gross margin improved to 39% from 22% in the same period last year.
Operating income rose to $16.9 million, significantly higher than $2.1 million in the prior year.
Net income reached $15.9 million, or $0.34 per diluted share, compared to $39 thousand in Q3 2020.
Hudson
Hudson
Forward Guidance
Hudson Technologies expects the EPA's final rule on HFC allowances, mandated by the AIM Act, to impact the industry. The company believes it is well-positioned to capture market share through its reclamation capabilities and distribution network as the HFC supply tightens.
Positive Outlook
- Hudson received an allocation allowance for calendar year 2022 equal to approximately 3 million Metric Tons Exchange Value Equivalents.
- The reduction in virgin HFC supply is expected to accelerate reclamation activity.
- Hudson believes it is competitively positioned through its reclamation capabilities and robust distribution network.
- The company's technology can service and reclaim any refrigerant, including next-generation HFOs.
- Hudson supports the global efforts to transition to more environmentally friendly gases.
Challenges Ahead
- There has been a significant disruption in the supply chain, affecting product availability and transportation.
- Reduced demand volume due to a focus on higher-margin customers.
- Slower than expected reopening of businesses impacted demand volume.
- Allowances for 2023 and beyond are yet to be determined.
- Subsequent allowances must establish a 40% reduction in virgin production and importation from the current baseline, in 2024.