Hudson Technologies, Inc. (Hudson Technologies), a US-based provider of refrigerant services, has reported revenues of $6.6 million for the first quarter of 2009, down 42%, compared with the revenues of $11.4 million in the year-ago quarter. It has also reported a net loss of $275,000, or $0.01 loss per share, for the first quarter of 2009, compared with the net income of $1.75 million, or $0.09 per share, in the year-ago quarter.
Kevin J. Zugibe, chairman and chief executive officer of Hudson Technologies commented, “We are obviously disappointed with our first quarter financial results. From 2004 through the end of 2008, Hudson has demonstrated steady, double digit revenue growth and dramatic improvement in earnings, culminating in more than $33 million in revenues and more than $6.9 million in net profit in 2008. As is evident from our first quarter 2009 results, our five year growth trend has been, we believe, temporarily interrupted by unprecedented market conditions resulting from the severe economic downturn that has impacted nearly every aspect of our nation’s economy.”
“Traditionally, the fourth quarter is our slowest quarter given the seasonality of the refrigerants business. Conversely, our first and second quarters are traditionally the strongest, during which most of our refrigerant sales are made each year as our customers typically increase their inventories and buy refrigerant in preparation for the warmer months. This year, because of the economic downturn, we believe that there has been a shift in the normal buying pattern. Customers have deferred their pre-season purchases to lower their inventory to below normal levels, a phenomenon also noted by other leaders in our industry in public statements to their investors.”
“We have been and remain in close contact with our customers and we do not believe that this unprecedented shift in our customers’ buying patterns reflects a reduction in the overall annual demand for refrigerants or that our customers are sourcing product from other suppliers. We are cautiously optimistic that we will see pent up demand at the end of the second quarter as we move into the warmer summer months when demand for air conditioning and refrigeration is at its peak. If this occurs we could see stronger third quarter revenues this year when compared to prior years. Fortunately, we are well positioned to meet any pent up demand and to accommodate our customers’ needs, and are therefore in a position to generate the revenues that we believe have shifted from the first quarter.”
Zugibe continued, “The current economic conditions will not impact the scope or the pace of the federally mandated phase out of the production of new (virgin) HCFC refrigerants, which will begin in January 2010, a mere seven months from now. This phase out is a catalytic event for Hudson, with the EPA having already proposed draft regulations issued last December that would limit the total amount of HCFCs that can be produced and imported to meet only 80% of the estimated U.S. demand. In proposing these regulations, the EPA expects that 20% of the demand will be met by reclaimed or recycled refrigerant, which amounts to a more than 300% increase in the demand for reclamation from current levels. As an industry leader with proven infrastructure and distillation capabilities, we expect to benefit from this industry shift.”
“In addition to the mandated HCFC phase out, we believe there are significant opportunities for our business related to climate legislation currently under consideration in Washington. A climate change bill, which is expected to establish a cap & trade system and will likely call for the phase down of the next generation of refrigerants, known as Hydrofluorocarbons (HFCs), could provide further growth opportunities for our reclamation business. Additionally, our optimization services, which deliver ways for system owners to optimize the performance and energy efficiency of their air conditioning and refrigeration systems, provide a method for our customers to monetize their CO2 reductions resulting from energy savings in the form of carbon credits.”
Zugibe concluded, “We are confident in our ability to adapt to the challenges presented by the current economic climate, and we remain committed to strategically positioning the Company to take full advantage of the significant opportunities we believe will result from the upcoming HCFC refrigerant phase out and proposed climate change legislation.”