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Hudson Technologies (HDSN - Free Report) reported earnings per share (EPS) of 8 cents in fourth-quarter 2023, which beat the Zacks Consensus Estimate of 7 cents. The bottom line declined 27% year over year.
Hudson’s quarterly sales dipped 5.5% year over year to $45 billion. However, the top line beat the consensus estimate of $39.7 billion.
The year-over-year decline in sales was attributed to a 24% decrease in selling prices for certain refrigerants, which offset higher volumes and increased revenues from the Defense Logistics Agency (“DLA”) contract.
Hudson Technologies, Inc. Price, Consensus and EPS Surprise
The cost of sales declined 4% year over year to $30.9 million. The gross profit was down 9% year over year to $14 million. The gross margin was 31.1% in the quarter compared with the prior-year period’s 32.3%.
Selling, general and administrative expenses rose 13% year over year to $8.5 million. Hudson's operating income in the quarter slumped 33% year over year to $4.7 million. The operating margin was 10.6% compared with 15% in the prior-year quarter.
2023 Performance
EPS plunged 50% year over year to $1.10 in 2023, missing the Zacks Consensus Estimate of $1.14. Sales were down 11% year over year to $289 million owing to lower selling prices for certain refrigerants. The top line surpassed the consensus estimate of $284 million.
The revenue figure for 2023 included $53 million from the company’s DLA contract, which reflected record annual revenues from the contract. HDSN estimates that approximately $20 million of this is related to increased DLA-specific program activities that may not be repeated in 2024.
The company had cash and cash equivalents of $12.4 million at the end of 2023, up from $5.3 million at 2022-end. Hudson generated cash flow from operations of $58.5 million in 2023. The company fully paid off its remaining $32.5 million of term loan debt during the third quarter of 2023 and has no debt on its balance sheet as of Dec 31, 2023.
Outlook
HDSN is expected to gain from the surge in demand for reclaimed refrigerants due to the phasedown of production and consumption of Hydrofluorocarbons (HFCs) in the United States as mandated by the AIM Act. HFCs are potent greenhouse gases used in refrigerators, air conditioners and other applications. The current stepdown in virgin production and consumption constitutes 40% of the baseline for the period from 2024 to 2028.
The proposed Refrigerant Management rule is expected to boost demand for HDSN’s reclaimed refrigerants, given the mandates for their usage in specific sectors. Hudson has been the leader in refrigerant reclamation for nearly three decades and is well-poised to meet this demand.
Price Performance
In the past year, Hudson’s shares have gained 50.7% compared with the industry’s 18.8% growth.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Hudson Technologies currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Cadre Holdings’ 2024 earnings is pegged at $1.15 per share. The consensus estimate for 2024 earnings has moved 5.5% north in the past 60 days and suggests year-over-year growth of 5.5%. The company has a trailing four-quarter average earnings surprise of 45.6%. CDRE shares have gained 70% in the past year.
The Zacks Consensus Estimate for Proto Labs’ 2024 earnings is pegged at $1.62 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days and suggests year-over-year growth of 1.9%. The company has a trailing four-quarter average earnings surprise of 42.2%. PRLB shares have gained 7% in the past year.
Applied Industrial has an average trailing four-quarter earnings surprise of 13.9%. The Zacks Consensus Estimate for AIT’s 2024 earnings is pinned at $9.43 per share, which indicates year-over-year growth of 7.8%. Estimates have been unchanged in the past 60 days. The company’s shares have gained 29.6% in the past year.
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Hudson (HDSN) Q4 Earnings Beat, Sales Dip Y/Y on Low Prices
Hudson Technologies (HDSN - Free Report) reported earnings per share (EPS) of 8 cents in fourth-quarter 2023, which beat the Zacks Consensus Estimate of 7 cents. The bottom line declined 27% year over year.
Hudson’s quarterly sales dipped 5.5% year over year to $45 billion. However, the top line beat the consensus estimate of $39.7 billion.
The year-over-year decline in sales was attributed to a 24% decrease in selling prices for certain refrigerants, which offset higher volumes and increased revenues from the Defense Logistics Agency (“DLA”) contract.
Hudson Technologies, Inc. Price, Consensus and EPS Surprise
Hudson Technologies, Inc. price-consensus-eps-surprise-chart | Hudson Technologies, Inc. Quote
Operational Update
The cost of sales declined 4% year over year to $30.9 million. The gross profit was down 9% year over year to $14 million. The gross margin was 31.1% in the quarter compared with the prior-year period’s 32.3%.
Selling, general and administrative expenses rose 13% year over year to $8.5 million. Hudson's operating income in the quarter slumped 33% year over year to $4.7 million. The operating margin was 10.6% compared with 15% in the prior-year quarter.
2023 Performance
EPS plunged 50% year over year to $1.10 in 2023, missing the Zacks Consensus Estimate of $1.14. Sales were down 11% year over year to $289 million owing to lower selling prices for certain refrigerants. The top line surpassed the consensus estimate of $284 million.
The revenue figure for 2023 included $53 million from the company’s DLA contract, which reflected record annual revenues from the contract. HDSN estimates that approximately $20 million of this is related to increased DLA-specific program activities that may not be repeated in 2024.
The company had cash and cash equivalents of $12.4 million at the end of 2023, up from $5.3 million at 2022-end. Hudson generated cash flow from operations of $58.5 million in 2023. The company fully paid off its remaining $32.5 million of term loan debt during the third quarter of 2023 and has no debt on its balance sheet as of Dec 31, 2023.
Outlook
HDSN is expected to gain from the surge in demand for reclaimed refrigerants due to the phasedown of production and consumption of Hydrofluorocarbons (HFCs) in the United States as mandated by the AIM Act. HFCs are potent greenhouse gases used in refrigerators, air conditioners and other applications. The current stepdown in virgin production and consumption constitutes 40% of the baseline for the period from 2024 to 2028.
The proposed Refrigerant Management rule is expected to boost demand for HDSN’s reclaimed refrigerants, given the mandates for their usage in specific sectors. Hudson has been the leader in refrigerant reclamation for nearly three decades and is well-poised to meet this demand.
Price Performance
In the past year, Hudson’s shares have gained 50.7% compared with the industry’s 18.8% growth.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Hudson Technologies currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Cadre Holdings, Inc. (CDRE - Free Report) , Proto Labs, Inc. (PRLB - Free Report) and Applied Industrial Technologies (AIT - Free Report) . CDRE currently sports a Zacks Rank #1 (Strong Buy), and PRLB and AIT carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Cadre Holdings’ 2024 earnings is pegged at $1.15 per share. The consensus estimate for 2024 earnings has moved 5.5% north in the past 60 days and suggests year-over-year growth of 5.5%. The company has a trailing four-quarter average earnings surprise of 45.6%. CDRE shares have gained 70% in the past year.
The Zacks Consensus Estimate for Proto Labs’ 2024 earnings is pegged at $1.62 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days and suggests year-over-year growth of 1.9%. The company has a trailing four-quarter average earnings surprise of 42.2%. PRLB shares have gained 7% in the past year.
Applied Industrial has an average trailing four-quarter earnings surprise of 13.9%. The Zacks Consensus Estimate for AIT’s 2024 earnings is pinned at $9.43 per share, which indicates year-over-year growth of 7.8%. Estimates have been unchanged in the past 60 days. The company’s shares have gained 29.6% in the past year.