The increase in 2008 net income is mainly attributed to increased gross profit from an increase in refrigerant revenues, the absence of $4,338,000 of compensation expense recorded in the 2007 period, as well as an increase in the income tax benefit recorded in 2008 when compared to 2007.
Revenues for the three months ended December 31, 2008 were $2,871,000 compared to $2,732,000 in the same period of 2007. Gross profit margins declined to 23% in the fourth quarter of 2008 compared to 27% in the fourth quarter of 2007. In the fourth quarter of 2008, Hudson reported a net loss of $821,000 or $0.04 per basic and diluted common share compared to a net loss of $986,000 or $0.05 per basic and diluted common share in the fourth quarter of 2007.
Kevin J. Zugibe, chairman and chief executive officer of Hudson Technologies commented, “The fourth quarter, which is always our slowest given the seasonality of the refrigerants business, caps off a very strong year for the Company in which we demonstrated solid revenue growth and a significant increase in net income. We are continuing to position ourselves to capitalize on the opportunities that we expect to see with the January 2010 federally mandated phase down in the production of new (virgin) HCFC refrigerants. The EPA has proposed to reduce, effective January 1, 2010, the total amount of HCFCs that can be produced and imported to 80% of the EPA’s estimated and projected demand for 2010. In proposing these reductions, the EPA expects that at least 20% of the demand will be met by reclaimed or recycled refrigerant, which would require a significant increase in reclamation from current levels. As such, reclaimed refrigerant will be essential to make up the supply shortfall and to service the entire spectrum of existing units from small residential A/C units to large tonnage chillers that require HCFCs to function properly. As an industry leader with proven infrastructure and distillation capabilities, we expect to benefit from this industry shift.”
Zugibe continued, “Heading into 2009, we are of course cognizant of the current economic climate and we will have more clarity on how the overall economy may or may not affect our business during the second quarter. That being said, the economic climate does not dampen the significant opportunity in front of us with the upcoming catalytic shift that will impact our industry in 2010 and we are committed to strategically positioning the Company to take full advantage of this change to our marketplace,” Zugibe concluded.
Hudson Technologies is a US based distributor and reclaimer of refrigerants as well as a provider of on-site decontamination services for large comfort and process cooling systems.
