Hudson Technologies REPORTS Third QUarter Results

 - 11% Increase in Revenues; Operating Expenses Decrease 27% -

pearl river, ny – November 5, 2009 – Hudson Technologies, Inc. (NASDAQ: HDSN), a leading distributor and reclaimer of refrigerants as well as a provider of proprietary on-site decontamination services for large comfort and process cooling systems, announced results for the third quarter and nine months ended September 30, 2009. 

Revenues for the three months ended September 30, 2009 increased 11% to $6,499,000 from $5,841,000 in the comparable 2008 period. Gross profit margins decreased to 10% for the third quarter of 2009 compared to 33% in the third quarter of 2008.  Operating expenses decreased 27% to $941,000 in the third quarter ended September 30, 2009 compared to $1,282,000 for the third quarter ended September 30, 2008. Hudson reported a net loss of $658,000, or $0.03 per diluted common share, for the quarter ended September 30, 2009, compared to net income of $2,739,000, or $0.13 per diluted common share for the quarter ended September 30, 2008 which included an income tax benefit of $2,395,000. 

For the nine months ended September 30, 2009, Hudson reported revenues of $21,398,000 a decrease of 29% compared to revenues of $30,296,000 in the first nine months of 2008.  Gross profit margins decreased to 17% for the first nine months of 2009, compared to 35% in the first nine months of 2008.  Operating expenses decreased 18% to $3,395,000 for the first nine months of 2009 compared to $4,160,000 in the first nine months of 2008. The Company reported a net loss of $769,000, or $0.04 per diluted common share, for the nine months ended September 30, 2009, compared to net income of $7,490,000 or $0.36 per diluted common share in the nine months ended September 30, 2008 which included an income tax benefit of $2,395,000. 

Kevin J. Zugibe, Chairman and Chief Executive Officer of Hudson Technologies commented, “2009 has been a difficult year for Hudson as well as for those in our industry, as we contended with a sluggish economy and unseasonably cold weather that continued through most of the summer in the northern and northeastern regions of the U.S.  Despite these conditions, we reported an 11% increase in revenues for the third quarter as compared to last year.  We believe the increase is related to a brief period of warmer weather in early August that prompted our customers to purchase additional supplies of refrigerant to meet their needs for the balance of the season.  While our revenues were higher, our gross margin performance was disappointing.  Our gross profit margin was compressed due to an increase in the acquisition cost of our inventory and a decrease in our selling price of refrigerants due to excess supply in the refrigerant market carried forward into this period.”

“Given the difficult economic environment, we took steps to reduce our cost structure and, as a result, the Company reported an overall decrease of $765,000 in operating expenses for the first nine months of 2009. This reduction is primarily related to certain reductions in the 2009 compensation of the Company’s officers and employees, elimination of positions and reductions in professional fees.”

“As previously reported, our balance sheet and the Company’s current assets and liabilities tend to be counter cyclical to the Company’s sales.  Consequently, in a quarter of higher sales, the Company’s inventories and accounts payable and short term debt are typically lower and our accounts receivable balances increase.  As of September 30, 2009, the Company’s overall debt is $3.2 million lower than as of December 31, 2008.”

“In just sixty days, the EPA mandated phase out of hydrochlorofluorocarbon (HCFC) refrigerants will begin.  HCFC refrigerants represent more than 60% of the $1 billion US refrigerant aftermarket.  If the EPA regulations are implemented as proposed, HCFC production will be reduced to approximately 80% of the EPA’s projected U.S. aftermarket demand, creating the potential for a 20% shortfall in the supply of HCFC refrigerants.  This projected supply gap will need to be filled with reclaimed or recycled refrigerant, which we believe will result in an approximately three-fold increase in U.S. demand for recycled and reclaimed refrigerant.  As a leader in the reclamation industry, with proven infrastructure, recently enhanced production facilities and patented reclamation equipment, we believe Hudson is uniquely positioned to capitalize on this anticipated change in our industry.”

“We also believe the Company can benefit from proposed climate change legislation as well.  Refrigerants are high global warming gases and Hudson should be in a position to earn carbon credits through its responsible handling of certain refrigerants.  Additionally, through Hudson’s optimization services, which identify and remedy inefficiencies and thereby reduce energy consumption and emissions, our customers may be eligible for carbon credits for those reductions.  The climate change legislation currently under consideration by the Senate, if enacted, would create a mandatory cap and trade system which is expected to provide a greater value for carbon credits.  The proposed climate legislation, if enacted, is also expected to favorably impact the Company by mandating a phase down in production of hydroflourocarbon (HFC) refrigerants beginning in 2012, thereby further encouraging reclamation/recycling. Currently HFC’s represent close to 30% of the overall US refrigerant aftermarket and, over the coming years, will represent a majority of this market.”

Mr. Zugibe concluded, “We are focused on meeting the needs of our customers and we remain committed to strategically positioning the Company to take advantage of the changing regulatory environment.”

CONFERENCE CALL INFORMATION

The Company will host a conference call to discuss the third quarter and nine month results on November 5, 2009 at 10:00 A.M. Eastern Time.

To access the live webcast, log onto the Hudson Technologies website at www.hudsontech.com and click on “Investor Relations”.

To participate in the call by phone, dial 888-215-6853 approximately five minutes prior to the scheduled start time. International callers please dial 913-312-0980.

A replay of the webcast can be accessed by visiting the Investor Relations section of the Hudson Technologies website.

A replay of the teleconference will be available until November 12, 2009 and may be accessed domestically by dialing 888-203-1112 and international callers may dial 719-457-0820.  Callers should use pass code 8326149.

About Hudson Technologies

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. For further information on Hudson, please visit the Company's web site at www.hudsontech.com. 

Safe Harbor Statement under the Private Securities Litigation Act of 1995

Statements contained herein, which are not historical facts constitute forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, but are not limited to, changes in the markets for refrigerants (including unfavorable market conditions adversely affecting the demand for, and the price of refrigerants), the Company's ability to source refrigerants, regulatory and economic factors, seasonality, competition, litigation, the nature of supplier or customer arrangements which become available to the Company in the future, adverse weather conditions, possible technological obsolescence of existing products and services, possible reduction in the carrying value of long-lived assets, estimates of the useful life of its assets, potential environmental liability, customer concentration, the ability to obtain financing and other risks detailed in the Company's periodic reports filed with the Securities and Exchange Commission.  The words "believe", "expect", "anticipate", "may", "plan", "should" and similar expressions identify forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Investor Relations Contact: John Nesbett/Jennifer Belodeau Institutional Marketing Services (IMS) (203) 972-9200 jnesbett@institutionalms.com   Investor contact: BPC Financial Marketing John Baldissera 800-368-1217

Company Contact: Brian F. Coleman, President & COO Hudson Technologies, Inc. (845) 735-6000 bcoleman@hudsontech.com

 

 

Hudson Technologies, Inc. and subsidiaries

Consolidated Balance Sheets

(Amounts in thousands, except for share and par value amounts)

				September 30, 2009	December 31, 2008
				(unaudited)
Assets
Current assets:
	Cash and cash equivalents			$  1,438	$    214
	Trade accounts receivable - net of allowance for doubtful
			accounts of $297 and $254	3,030	1,731
	Inventories			14,270	23,613
	Prepaid expenses and other current assets			346	293
	Deferred tax assets			69	372
		Total current assets		19,153	26,223
Property, plant and equipment, less accumulated depreciation and amortization				3,019	2,921
Other assets				119	158
Deferred tax assets				4,492	4,120
Intangible assets, less accumulated amortization				72	73
		Total Assets		$26,855	$33,495
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable and accrued expenses			$  2,275	$ 5,590
	Accrued payroll			200	1,010
	Short-term debt and current maturities of long-term debt			6,112	8,524
		Total current liabilities		8,587	15,124
Long-term debt, less current maturities				4,874	5,665
		Total Liabilities		13,461	20,789
Commitments and contingencies
Stockholders' equity:
	Preferred stock shares authorized 5,000,000
	Series A Convertible Preferred stock, $0.01 par value ($100
			liquidation preference value); shares authorized 150,000	--	--
	Common stock, $0.01 par value; shares authorized 50,000,000
			issued and outstanding 20,931,706 and 19,424,533	209	194
	Additional paid-in capital			37,262	35,820
	Accumulated deficit			(24,077)	(23,308)
		Total Stockholders' Equity		13,394	12,706
Total Liabilities and Stockholders' Equity				$26,855	$33,495

 

 Hudson Technologies, Inc. and subsidiaries

Consolidated Statements of Operations

(unaudited)

(Amounts in thousands, except for share and per share amounts)

					Three month period         ended September 30,		Nine month period            ended September 30,
					2009	2008	2009	2008
Revenues					$6,499	$5,841	$21,398	$30,296
Cost of sales					5,827	3,917	17,682	19,632
Gross Profit					672	1,924	3,716	10,664
Operating expenses:
	Selling and marketing				411	510	1,412	1,629
		General and administrative			530	772	1,983	2,531
				Total operating expenses	941	1,282	3,395	4,160
Operating income (loss)					(269)	642	321	6,504
Other income (expense):
	Interest expense				(368)	(299)	(1,138)	(868)
	Interest income				--	1	--	3
				Total other income (expense)	(368)	(298)	(1,138)	(865)
Income (loss) before income taxes					(637)	344	(817)	5,639
Income tax provision (benefit)					21	(2,395)	(48)	(1,851)
Net income (loss)					($658)	$2,739	($769)	$7,490
Net income (loss) per common share – Basic					($0.03)	$0.14	($0.04)	$0.39
Net income (loss) per common share - Diluted					($0.03)	$0.13	($0.04)	$0.36
Weighted average number of shares
			outstanding – Basic		19,930,257	19,409,761	19,551,381	19,262,425
Weighted average number of shares
			outstanding – Diluted		19,930,257	20,979,713	19,551,381	20,523,254