Hudson Technologies, Inc. (HDSN) Bundle
Understanding Hudson Technologies, Inc. (HDSN) Revenue Streams
Understanding Hudson Technologies, Inc.’s Revenue Streams
Revenue Overview: For the nine-month period ended September 30, 2024, the company reported total revenues of $202.5 million, down from $244.2 million during the same period in 2023, reflecting a decrease of 17%.
Revenue Breakdown by Source
The company generates revenue primarily from two segments:
- Product and related sales
- RefrigerantSide® Services
| Revenue Source | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) |
|---|---|---|---|---|
| Product and related sales | $60,130 | $74,915 | $196,928 | $238,811 |
| RefrigerantSide® Services | $1,813 | $1,581 | $5,547 | $5,358 |
| Total Revenues | $61,943 | $76,496 | $202,475 | $244,169 |
Year-over-Year Revenue Growth Rate
The revenue decline is primarily attributed to a 14% reduction in selling prices and a 7% drop in the volume of refrigerants sold during the third quarter of 2024 compared to the same period in 2023.
Contribution of Different Business Segments
For the nine-month period ended September 30, 2024, the breakdown of revenue contributions from different segments was as follows:
- Product and related sales: 97% of total revenue
- RefrigerantSide® Services: 3% of total revenue
Significant Changes in Revenue Streams
The significant changes in revenue streams include:
- Decrease in selling prices by 18% year-over-year.
- Increase in volume of refrigerants sold by 2%, which partially offset the revenue decline.
- Revenue from the acquisition of USA Refrigerants contributed $5.5 million to total revenues for the nine-month period ended September 30, 2024.
Overall, the financial results indicate a challenging market environment, with price pressures impacting revenue despite stable sales volume.
A Deep Dive into Hudson Technologies, Inc. (HDSN) Profitability
A Deep Dive into Hudson Technologies, Inc. Profitability
Gross Profit Margin: For the three-month period ended September 30, 2024, gross profit was $15.9 million, compared to $30.6 million for the same period in 2023. This represents a decrease in gross profit margin from 40% to 25.7%.
Operating Profit Margin: Operating income for the three-month period ended September 30, 2024, was $7.0 million, down from $23.1 million in 2023, resulting in an operating profit margin of 11.3% compared to 30.2% a year earlier.
Net Profit Margin: Net income for the three-month period ended September 30, 2024, was $7.8 million, a decrease from $13.6 million in the same period in 2023, leading to a net profit margin of 12.6% versus 17.8%.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit | $15.9 million | $30.6 million | -48.0% |
| Operating Income | $7.0 million | $23.1 million | -69.7% |
| Net Income | $7.8 million | $13.6 million | -42.6% |
Trends in Profitability: Over the nine-month period ended September 30, 2024, revenues were $202.5 million, a decrease of 17% from $244.2 million in 2023. The net income for the nine months was $27.0 million, down from $48.3 million, indicating a significant decline in profitability over the past year.
Comparison of Profitability Ratios with Industry Averages: The company's gross profit margin of 25.7% is below the industry average of approximately 30%. Its operating margin of 11.3% also falls short of the industry standard, which typically hovers around 15%. The net profit margin of 12.6% is in line with industry averages, which range from 10% to 15%. This indicates that while the company is performing reasonably well in terms of net profit, its overall efficiency in operations and gross profitability requires improvement.
Operational Efficiency Analysis: Selling, general, and administrative (SG&A) expenses for the nine-month period were $25.0 million, an increase of 13.6% from $22.0 million in 2023. This increase is primarily due to higher personnel costs and professional fees. The cost of sales for the nine-month period was $142.5 million, representing 70% of total sales, up from 60% in the previous year, indicating a rise in operational costs that affected profitability.
Gross Margin Trends: The gross margin for the nine-month period ended September 30, 2024, was 29.6%, a decline from 39.9% in the previous year. This decreasing trend in gross margin reflects challenges in cost management and fluctuating selling prices in the refrigerant market.
| Metric | 9M 2024 | 9M 2023 | Change |
|---|---|---|---|
| Revenues | $202.5 million | $244.2 million | -17% |
| Net Income | $27.0 million | $48.3 million | -44.0% |
| Gross Margin | 29.6% | 39.9% | -25.5% |
| SG&A Expenses | $25.0 million | $22.0 million | +13.6% |
Debt vs. Equity: How Hudson Technologies, Inc. (HDSN) Finances Its Growth
Debt vs. Equity: How Hudson Technologies Finances Its Growth
Debt Levels
As of September 30, 2024, the company reported total liabilities of $55.5 million, with no outstanding debt under its revolving credit facility, which has a borrowing capacity of $75 million. The company had previously repaid a term loan facility of $32.5 million in July 2023.
Debt-to-Equity Ratio
The debt-to-equity ratio stands at 0.22, significantly lower than the industry average of approximately 0.50, indicating a conservative approach to leveraging.
Recent Debt Issuances and Credit Ratings
There have been no new debt issuances in 2024, and the company maintains a strong credit profile with its revolving credit facility arranged through Wells Fargo. The facility provides flexibility for working capital needs and future acquisitions.
Balance Between Debt Financing and Equity Funding
The company has historically financed its operations through a mix of cash flows from operations, equity issuances, and minimal debt. In 2024, net cash used in financing activities was $2.6 million, a decrease from $42.8 million in 2023, reflecting the absence of debt repayments.
| Financial Metric | Value (2024) | Value (2023) | Industry Average |
|---|---|---|---|
| Total Liabilities | $55.5 million | $67.9 million | N/A |
| Debt-to-Equity Ratio | 0.22 | 0.28 | 0.50 |
| Outstanding Debt | $0.0 million | $32.5 million | N/A |
| Net Cash Used in Financing Activities | $2.6 million | $42.8 million | N/A |
The company's strategy reflects a balance favoring equity funding, enhancing its financial stability while minimizing interest obligations.
Assessing Hudson Technologies, Inc. (HDSN) Liquidity
Assessing Hudson Technologies, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
Current Assets: $213.4 million (includes cash and cash equivalents of $56.5 million, trade receivables of $28.5 million, and inventories of $103.5 million)
Current Liabilities: $56.5 million (total accrued expenses and other current liabilities)
Current Ratio = Current Assets / Current Liabilities = $213.4 million / $56.5 million = 3.78
Quick Ratio: The quick ratio is calculated by excluding inventories from current assets:
Quick Assets: $213.4 million - $103.5 million = $109.9 million
Quick Ratio = Quick Assets / Current Liabilities = $109.9 million / $56.5 million = 1.94
Analysis of Working Capital Trends
Working Capital as of September 30, 2024: $156.9 million
Working Capital as of December 31, 2023: $146.4 million
Increase in Working Capital: $10.5 million primarily due to increased accounts receivable and inventory adjustments.
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, the net cash provided by operating activities was $71.1 million, compared to $43.5 million for the same period in 2023.
Investing Cash Flow: Net cash used in investing activities was $24.4 million for the nine months ended September 30, 2024, compared to $2.2 million in 2023.
Financing Cash Flow: Net cash used in financing activities was $2.6 million for the nine months ended September 30, 2024, a decrease from $42.8 million in 2023, primarily due to the repayment of debt in 2023.
Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents were $56.5 million, significantly higher than the $12.4 million reported at December 31, 2023. This increase indicates a strong liquidity position.
| Financial Metrics | 2024 | 2023 |
|---|---|---|
| Current Assets | $213.4 million | $158.7 million |
| Current Liabilities | $56.5 million | $12.5 million |
| Current Ratio | 3.78 | 12.69 |
| Quick Assets | $109.9 million | $107.2 million |
| Quick Ratio | 1.94 | 8.58 |
| Working Capital | $156.9 million | $146.4 million |
| Operating Cash Flow | $71.1 million | $43.5 million |
| Investing Cash Flow | ($24.4 million) | ($2.2 million) |
| Financing Cash Flow | ($2.6 million) | ($42.8 million) |
Is Hudson Technologies, Inc. (HDSN) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we will analyze several key valuation metrics including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The P/E ratio is calculated using the following data:
- Market Price per Share: $8.06 (as of September 30, 2024)
- Basic Earnings per Share (EPS) for the last 12 months: $0.59
Thus, the P/E ratio is:
P/E Ratio = Market Price per Share / EPS = $8.06 / $0.59 = 13.67
Price-to-Book (P/B) Ratio
The P/B ratio is derived from the following:
- Book Value per Share: $5.61 (calculated as Total Stockholders’ Equity of $253.9 million divided by 45.2 million shares)
Therefore, the P/B ratio is:
P/B Ratio = Market Price per Share / Book Value per Share = $8.06 / $5.61 = 1.44
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated using the following:
- Total Enterprise Value (EV): $268.1 million (calculated as Market Capitalization of $364.1 million - Cash and Cash Equivalents of $56.5 million + Total Debt of $60 million)
- EBITDA for the last 12 months: $34 million
Consequently, the EV/EBITDA ratio is:
EV/EBITDA Ratio = EV / EBITDA = $268.1 million / $34 million = 7.88
Stock Price Trends
The following table outlines the stock price trends over the last 12 months:
| Month | Stock Price ($) |
|---|---|
| October 2023 | 9.00 |
| January 2024 | 10.50 |
| April 2024 | 9.50 |
| July 2024 | 8.80 |
| September 2024 | 8.06 |
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0% and a payout ratio of 0%.
Analyst Consensus on Stock Valuation
The consensus among analysts regarding the stock valuation as of September 30, 2024, is:
- Buy: 2 analysts
- Hold: 5 analysts
- Sell: 1 analyst
In summary, the valuation analysis indicates a P/E ratio of 13.67, a P/B ratio of 1.44, and an EV/EBITDA ratio of 7.88. The stock has experienced a decline over the past year, with a current price of $8.06 and no dividend distribution. Analyst recommendations show a mixed outlook, with more analysts recommending a hold on the stock.
Key Risks Facing Hudson Technologies, Inc. (HDSN)
Key Risks Facing Hudson Technologies, Inc. (HDSN)
Overview of Internal and External Risks
Hudson Technologies, Inc. faces a range of internal and external risks that could significantly impact its financial health. Key risks include:
- Industry Competition: The refrigerant industry is highly competitive, with numerous players vying for market share. This competition can lead to pricing pressures and reduced margins.
- Regulatory Changes: The refrigerant industry is subject to stringent environmental regulations, particularly concerning the use of certain gases. Changes in these regulations could affect the company's operations and product offerings.
- Market Conditions: Fluctuations in demand for refrigerants and related services can impact revenue. Economic downturns or changes in consumer preferences may also pose risks.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Revenue Decline: For the nine-month period ending September 30, 2024, revenues were $202.5 million, a decrease of $41.7 million or 17% from the prior year. This decline was primarily due to lower selling prices, which decreased by 18%, despite a 2% increase in volume sold.
- Increased Cost of Sales: The cost of sales for the same period was $142.5 million, representing 70% of sales, up from 60% the previous year. This increase is attributed to higher costs associated with inventory sold at higher prices.
- SG&A Expenses: Selling, general, and administrative expenses rose to $25.0 million for the nine-month period ended September 30, 2024, an increase of $3.0 million compared to the prior year, largely due to increased personnel costs and acquisition-related expenses.
Mitigation Strategies
The company has implemented several strategies to mitigate risks:
- Acquisitions: The acquisition of USA Refrigerants for approximately $20.7 million aims to enhance market reach and operational capabilities.
- Cost Management: The company is focusing on controlling SG&A expenses and optimizing operational efficiencies to improve margins.
- Regulatory Compliance: Ongoing investment in compliance initiatives to adhere to environmental regulations and avoid potential penalties.
| Risk Factor | Description | Current Impact |
|---|---|---|
| Revenue Decline | Decrease in revenues due to lower selling prices and fluctuating demand. | $202.5 million in revenues for the nine months ended September 30, 2024. |
| Cost of Sales | Increased costs associated with inventory sold at higher prices. | $142.5 million in cost of sales, representing 70% of total sales. |
| SG&A Expenses | Rising costs related to personnel and acquisitions. | $25.0 million in SG&A expenses for the nine-month period. |
| Regulatory Changes | Potential changes in environmental regulations affecting product offerings. | Ongoing compliance costs and operational adjustments. |
| Market Conditions | Fluctuations in demand impacting revenue stability. | Potential for decreased revenue in economic downturns. |
At September 30, 2024, cash and cash equivalents stood at $56.5 million, a significant increase from $12.4 million at the end of 2023, providing a buffer against operational risks.
Future Growth Prospects for Hudson Technologies, Inc. (HDSN)
Future Growth Prospects for Hudson Technologies, Inc.
Analysis of Key Growth Drivers
Hudson Technologies, Inc. is positioned to leverage various growth drivers that could significantly enhance its market presence and financial performance.
- Product Innovations: The company has been focusing on the development of new refrigerants and reclamation technologies, which are crucial given the regulatory pressures on traditional refrigerants. This innovation is expected to capture a larger market share as customers transition to more sustainable options.
- Market Expansions: Hudson Technologies is actively exploring opportunities to expand its geographic footprint, particularly in regions with increasing demand for refrigerants due to new construction and retrofitting of existing systems.
- Acquisitions: The acquisition of USA Refrigerants on June 6, 2024, for approximately $20.7 million in cash, is anticipated to provide a broader customer network and enhance distribution capabilities.
Future Revenue Growth Projections and Earnings Estimates
Revenue projections for the upcoming quarters indicate a potential rebound as the company capitalizes on its recent acquisition and the introduction of new products. For the nine-month period ended September 30, 2024, revenues totaled $202.5 million, reflecting a decrease compared to $244.2 million in the same period of 2023, primarily due to lower selling prices.
Looking ahead, analysts expect revenue growth to stabilize and potentially increase as market conditions improve and the integration of USA Refrigerants begins to yield results. The company’s net income for the nine months was $26.9 million, down from $48.3 million in the prior year.
Strategic Initiatives and Partnerships
Hudson Technologies has outlined several strategic initiatives that are likely to drive future growth:
- Partnerships with Environmental Agencies: Collaborating with regulatory bodies to develop compliant refrigerant solutions could enhance credibility and market acceptance.
- Investment in Technology: Continued investment in advanced reclamation technology is expected to improve operational efficiencies and reduce costs, thus increasing margins.
- Supply Chain Optimization: Efforts to secure long-term contracts with suppliers for critical refrigerants will help stabilize costs and ensure consistent product availability.
Competitive Advantages
The company possesses several competitive advantages that position it favorably for growth:
- Established Market Presence: A strong reputation in the refrigerant reclamation market allows Hudson Technologies to maintain a loyal customer base.
- Regulatory Compliance: Expertise in navigating environmental regulations provides a competitive edge as the market shifts towards more sustainable practices.
- Diverse Product Portfolio: A wide range of refrigerant products and services caters to various customer needs, thus mitigating risks associated with market fluctuations.
Financial Overview
The financial health of Hudson Technologies indicates a strong foundation for pursuing growth opportunities:
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Revenues | $61.9 million | $76.5 million | -19% |
| Net Income | $7.8 million | $13.6 million | -43% |
| SG&A Expenses | $8.1 million | $6.8 million | +19% |
| Working Capital | $156.9 million | $146.4 million | +10% |
The company's working capital increased to $156.9 million as of September 30, 2024, from $146.4 million at the end of 2023, indicating a solid liquidity position.
Hudson Technologies, Inc. (HDSN) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Hudson Technologies, Inc. (HDSN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Hudson Technologies, Inc. (HDSN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Hudson Technologies, Inc. (HDSN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.