HUDSON TECHNOLOGIES INC NY

Previous wording

The Company also sells industrial gases to a variety of industry customers, including to users in, or involved with, the US Military. In July 2016, the Company was awarded, as prime contractor, a five-year fixed price contract, including a five-year renewal option which has been exercised, awarded to it by the United States Defense Logistics Agency (“DLA”) for the management and supply of refrigerants, compressed gases, cylinders and related items to US Military commands and installations, Federal civilian agencies and foreign militaries. Primary users include the US Army, Navy, Air Force, Marine Corps and Coast Guard. Our contract with DLA expires in July 2026.

Current wording

The Company also sells industrial gases to a variety of industry customers, predominantly to users in, or involved with, the US Military. In July 2016, the Company was awarded, as prime contractor, a five-year fixed price contract, including a five-year renewal option which has been exercised, awarded to it by the United States Defense Logistics Agency (“DLA”) for the management and supply of refrigerants, compressed gases, cylinders and related items to US Military commands and installations, Federal civilian agencies and foreign militaries. Primary users include the US Army, Navy, Air Force, Marine Corps and Coast Guard. Our contract with DLA expires in July 2026.

Previous wording

Selling, general and administrative (“SG&A”) expenses for the three-month period ended September 30, 2024 were $8.1 million, an increase of $1.3 million from the $6.8 million reported during the comparable 2023 period due to an increase in personnel costs and professional fees.

Current wording

Selling, general and administrative (“SG&A”) expenses for the three-month period ended March 31, 2025 were $8.2 million, an increase of $0.3 million from the $7.9 million reported during the comparable 2024 period due to an increase in personnel costs.

Previous wording

Amortization expense for the three-month periods ended September 30, 2024 and 2023 was $0.9 million and $0.7 million, respectively.

Current wording

Amortization expense for the three-month periods ended March 31, 2025 and 2024 was $0.8 million and $0.7 million, respectively.

Previous wording

The income tax expense for the three-month period ended September 30, 2024 was $1.7 million compared to income tax expense of $5.2 million for the three month period ended September 30, 2023. Income tax expense for federal and state income tax purposes was determined by applying statutory income tax rates to pre-tax income after adjusting for certain items.

Current wording

The Company’s income tax expense for the three-month period ended March 31, 2025 and March 31, 2024 was $0.9 million and $3.0 million, respectively. The Company’s effective tax rate for the three-month period ended March 31, 2025 and March 31, 2024 was 24.5% and 23.9%, respectively. For the three-month period ended March 31, 2025 and March 31, 2024, income tax expense for federal and state income tax purposes was determined by applying statutory income tax rates to pre-tax income after adjusting for certain items.

Previous wording

The net income for the three-month period ended September 30, 2024 was $7.8 million, a decrease of $5.8 million from the $13.6 million of net income reported during the comparable 2023 period, primarily due to lower sale prices of certain refrigerant sold and higher SG&A costs, as described above.

Current wording

The net income for the three-month period ended March 31, 2025 was $2.8 million, a decrease of $6.8 million from the $9.6 million of net income reported during the comparable 2024 period, primarily due to lower revenues, as described above.

Previous wording

At September 30, 2024, the Company had working capital, which represents current assets less current liabilities, of $156.9 million, an increase of $10.5 million from the working capital of $146.4 million at December 31, 2023. The increase in working capital is primarily attributable to accounts receivable and inventory.

Current wording

At March 31, 2025, the Company had working capital, which represents current assets less current liabilities, of $149.0 million, an increase of $1.3 million from the working capital of $147.7 million at December 31, 2024. The increase in working capital is primarily attributable to a rise in cash.

Previous wording

Inventories and trade receivables are principal components of current assets. At September 30, 2024, the Company had inventories of $103.5 million, a decrease of $51.0 million from $154.5 million at December 31, 2023. The Company’s ability to sell and replace its inventory on a timely basis and the prices at which it can be sold are subject, among other things, to current market conditions and the nature of supplier or customer arrangements and the Company’s ability to source CFC and HCFC based refrigerants (which are no longer being produced) and HFC refrigerants (virgin production currently in the process of being phased down) and HFO refrigerants.

Current wording

Inventories and trade receivables are principal components of current assets. At March 31, 2025, the Company had inventories of $78.3 million, a decrease of $17.9 million from $96.2 million at December 31, 2024. The Company’s ability to sell and replace its inventory on a timely basis and the prices at which it can be sold are subject, among other things, to current market conditions and the nature of supplier or customer arrangements and the Company’s ability to source CFC and HCFC based refrigerants (which are no longer being produced) and HFC refrigerants (virgin production currently in the process of being phased down) and HFO refrigerants.

Previous wording

At September 30, 2024, the Company had trade receivables, net of allowance for credit losses, of $28.5 million, an increase of $3.3 million from $25.2 million at December 31, 2023, mainly due to seasonal timing. The Company typically generates its most significant revenue during the second and third quarters of any given year. The Company’s trade receivables are concentrated with various wholesalers, brokers, contractors and end-users within the refrigeration industry that are primarily located in the continental United States. The Company has historically financed its working capital requirements through cash flows from operations, debt, and the issuance of equity securities.

Current wording

At March 31, 2025, the Company had trade receivables, net of allowance for credit losses, of $27.5 million, an increase of $13.9 million from $13.6 million at December 31, 2024, mainly due to seasonal timing. The Company typically generates its most significant revenue during the second and third quarters of any given year. The Company’s trade receivables are concentrated with various wholesalers, brokers, contractors and end-users within the refrigeration industry that are primarily located in the continental United States. The Company has historically financed its working capital requirements through cash flows from operations, debt, and the issuance of equity securities.

Previous wording

Net cash provided by operating activities for the nine-month period ended September 30, 2024 was $71.1 million, when compared to net cash provided by operating activities of $43.5 million for the comparable 2023 period. As discussed above, selling prices of certain refrigerants declined in 2024. The increase is largely due to the recent acquisition of USA Refrigerants. Another contributory factor was the timing of accounts receivable, accounts payable and accrued expenses.

Current wording

Net cash provided by operating activities for the three-month period ended March 31, 2025 was $14.2 million, when compared to net cash used in operating activities of $0.9 million for the comparable 2024 period. The increase is due to timing of accounts receivable, inventories, accounts payable and accrued expenses.

Previous wording

Net cash used in investing activities for the nine-month period ended September 30, 2024 was $24.4 million compared with net cash used in investing activities of $2.2 million for the comparable 2023 period, mainly due to the recent acquisition of USA Refrigerants as previously discussed and timing of capital expenditures related to capitalization of its ERP system.

Current wording

Net cash used in investing activities for the three-month period ended March 31, 2025 was $1.4 million compared with net cash used in investing activities of $1.0 million for the comparable 2024 period, mainly due to timing of capital expenditures related to capitalization of the Company’s ERP system.

Previous wording

Net cash used in financing activities for the nine-month period ended September 30, 2024 was $2.6 million compared with net cash used in financing activities of $42.8 million for the comparable 2023 period. The change is primarily because in 2023, the Company paid off $42.8 million of its debt as compared to no debt in 2024. During the quarter ended September 30, 2024, the Company repurchased 326,028 shares, totaling $2.6 million.

Current wording

Net cash used in financing activities for the three-month period ended March 31, 2025 was $1.8 million compared with net cash used in financing activities of $0.0 million for the comparable 2024 period. For the period ended March 31, 2025, the Company repurchased 308,588 shares of its common stock, at a cost of $1.8 million.

Previous wording

At September 30, 2024, cash and cash equivalents were $56.5 million, or approximately $44.1 million higher than the $12.4 million of cash and cash equivalents at December 31, 2023.

Current wording

At March 31, 2025, cash and cash equivalents were $81.0 million, or approximately $10.9 million higher than the $70.1 million of cash and cash equivalents at December 31, 2024.

Previous wording

The Amended Wells Fargo Facility contains a financial covenant requiring the Company to maintain at all times minimum liquidity (defined as availability under the Amended Wells Fargo Facility plus unrestricted cash) of at least $5 million, of which at least $3 million must be derived from availability. The Amended Wells Fargo Facility also contains a springing covenant, which takes effect only upon a failure to maintain undrawn availability of at least $11.25 million or upon an election by the Borrowers to increase the inventory component of the borrowing base, requiring the Company to maintain a Fixed Charge Coverage Ratio (FCCR) of not less than 1.00 to 1.00, as of the end of each trailing period of twelve consecutive months commencing with the month prior to the triggering of the covenant. The FCCR (as defined in the Wells Fargo Facility) is the ratio of (a) EBITDA for such period, minus unfinanced capital expenditures made during such period, to (b) the aggregate amount of (i) interest expense required to be paid (other than interest paid-in-kind, amortization of financing fees, and other non-cash interest expense) during such period, (ii) scheduled principal payments (but excluding principal payments relating to outstanding Revolving Loans under the Amended Wells Fargo Facility), (iii) all net federal, state, and local income taxes required to be paid during such period (provided, that any tax refunds received shall be applied to the period in which the cash outlay for such taxes was made), (iv) all restricted payments paid (as defined in the Amended Wells Fargo Facility) during such period, and (v) to the extent not otherwise deducted from EBITDA for such period, all payments required to be made during such period in respect of any funding deficiency or funding shortfall with respect to any pension plan. The FCCR covenant ceases after the Borrowers have been in compliance therewith for two consecutive months.

Current wording

unfinanced capital expenditures made during such period, to (b) the aggregate amount of (i) interest expense required to be paid (other than interest paid-in-kind, amortization of financing fees, and other non-cash interest expense) during such period, (ii) scheduled principal payments (but excluding principal payments relating to outstanding Revolving Loans under the Amended Wells Fargo Facility), (iii) all net federal, state, and local income taxes required to be paid during such period (provided, that any tax refunds received shall be applied to the period in which the cash outlay for such taxes was made), (iv) all restricted payments paid (as defined in the Amended Wells Fargo Facility) during such period, and (v) to the extent not otherwise deducted from EBITDA for such period, all payments required to be made during such period in respect of any funding deficiency or funding shortfall with respect to any pension plan. The FCCR covenant ceases after the Borrowers have been in compliance therewith for two consecutive months.

Previous wording

The Company evaluated the Amended Wells Fargo Facility in accordance with the provisions of ASC 470-50 to determine if the amendment was a modification or an extinguishment of debt and concluded that the amendment was a modification of the original revolving credit facility for accounting purposes. As a result, the Company capitalized an additional $0.9 million of deferred financing costs in connection with the amendment, which, along with the $0.2 million of remaining deferred financing costs of the original revolving facility, is being amortized over the five year term of the Amended Wells Fargo Facility.

Current wording

The Company evaluated the Amended Wells Fargo Facility in accordance with the provisions of ASC 470-50 to determine if the amendment and restatement was a modification or an extinguishment of debt and concluded that the amendment and restatement was a modification of the original revolving credit facility for accounting purposes. As a result, the Company capitalized an additional $0.9 million of deferred financing costs in connection with the amendment and restatement, which, along with the $0.2 million of remaining deferred financing costs of the original revolving facility, is being amortized over the five year term of the Amended Wells Fargo Facility.

Previous wording

On October 23, 2024, the Borrowers and the Company entered into a Second Amendment to Amended and Restated Credit Agreement dated October 23, 2024 (the “Second Amendment”) with Wells Fargo and the lenders under the Amended Wells Fargo Facility. The Second Amendment amends the provision relating to permitted stock repurchases by the Company, to permit stock repurchases in an amount not to exceed $10 million per calendar year in each of 2024 and 2025 and $5 million in any calendar year thereafter during the term of the Amended Wells Fargo Facility, upon satisfaction of certain conditions, subject to an aggregate cap of $25 million.

Current wording

On October 23, 2024, the Borrowers and the Company entered into a Second Amendment to Amended and Restated Credit Agreement (the “Second Amendment”) with Wells Fargo and the lenders under the Amended Wells Fargo Facility. The Second Amendment amends the provision relating to permitted stock repurchases by the Company, to permit stock repurchases in an amount not to exceed $10 million per calendar year in each of 2024 and 2025 and $5 million in any calendar year thereafter during the term of the Amended Wells Fargo Facility, upon satisfaction of certain conditions, subject to an aggregate cap of $25 million.

Previous wording

The Company’s ability to comply with these covenants in future quarters may be affected by events beyond the Company’s control, including general economic conditions, weather conditions, regulations and refrigerant pricing. Therefore, we cannot make any assurance that we will continue to be in compliance during future periods.

Current wording

The Company’s ability to comply with these covenants in future quarters may be affected by events beyond the Company’s control, including general economic conditions, weather conditions, regulations and refrigerant pricing. Therefore, the Company cannot make any assurance that it will continue to be in compliance during future periods.

Previous wording

The Company believes that it will be able to satisfy its working capital requirements for the foreseeable future from anticipated cash flows from operations and available funds under the Amended Wells Fargo Facility. Any unanticipated expenses, including, but not limited to, an increase in the cost of refrigerants purchased by the Company, an increase in operating expenses or failure to achieve expected revenues from the Company’s RefrigerantSide® Services and/or refrigerant sales or additional expansion or acquisition costs that may arise in the future would adversely affect the Company’s future capital needs. There can be no assurance that the Company’s proposed or future plans will be successful, and as such, the Company may require additional capital sooner than anticipated, which capital may not be available on acceptable terms, or at all.

Current wording

The Company believes that it will be able to satisfy its working capital requirements for the foreseeable future from anticipated cash flows from operations and available funds under the Amended Wells Fargo Facility. Any unanticipated expenses, including, but not limited to, an increase in the cost of refrigerants purchased by the Company, an increase in operating expenses or failure to achieve expected revenues from the Company’s RefrigerantSide® Services and/or refrigerant sales or additional expansion or acquisition costs that may arise in the future would adversely affect the Company’s future capital needs. There can be no assurance that any of the Company’s proposed or future plans will be successful, and as such, the Company may require additional capital sooner than anticipated, which capital may not be available on acceptable terms, or at all.

Previous wording

Inflation, historically or the recent increase, has had an impact on salaries and wages but less so on other aspects of the Company’s operations.

Current wording

Inflation, historically or the recent increase, has not had a material impact on the Company’s operations.