Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 08, 2023 | |
Document Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2023 | |
Entity File Number | 1-13412 | |
Entity Registrant Name | HUDSON TECHNOLOGIES INC /NY | |
Entity Incorporation, State or Country Code | NY | |
Entity Tax Identification Number | 13-3641539 | |
Entity Address, Address Line One | 300 Tice Boulevard | |
Entity Address, Address Line Two | Suite 290 | |
Entity Address, City or Town | Woodcliff Lake | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 07677 | |
City Area Code | 845 | |
Local Phone Number | 735-6000 | |
Title of 12(b) Security | Common stock, $0.01 par value | |
Trading Symbol | HDSN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 45,395,085 | |
Amendment Flag | false | |
Entity Central Index Key | 0000925528 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 11,415 | $ 5,295 |
Trade accounts receivable - net | 49,057 | 20,872 |
Inventories | 134,444 | 145,377 |
Prepaid expenses and other current assets | 10,377 | 5,289 |
Total current assets | 205,293 | 176,833 |
Property, plant and equipment, less accumulated depreciation | 19,909 | 20,568 |
Goodwill | 47,803 | 47,803 |
Intangible assets, less accumulated amortization | 16,167 | 17,564 |
Right of use asset | 7,497 | 7,339 |
Other assets | 2,386 | 2,386 |
Total Assets | 299,055 | 272,493 |
Current liabilities: | ||
Trade accounts payable | 17,579 | 14,165 |
Accrued expenses and other current liabilities | 28,334 | 27,908 |
Accrued payroll | 3,423 | 6,303 |
Current maturities of long-term debt | 4,250 | 4,250 |
Total current liabilities | 53,586 | 52,626 |
Deferred tax liability | 3,161 | 244 |
Long-term lease liabilities | 5,773 | 5,763 |
Long-term debt, less current maturities, net of deferred financing costs | 25,085 | 38,985 |
Total Liabilities | 87,605 | 97,618 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, shares authorized 5,000,000: Series A Convertible preferred stock, $0.01 par value ($100 liquidation preference value); shares authorized 150,000; none issued or outstanding | ||
Common stock, $0.01 par value; shares authorized 100,000,000; issued and outstanding 45,375,598 and 45,287,619, respectively | 454 | 453 |
Additional paid-in capital | 118,296 | 116,442 |
Accumulated retained earnings | 92,700 | 57,980 |
Total Stockholders' Equity | 211,450 | 174,875 |
Total Liabilities and Stockholders' Equity | $ 299,055 | $ 272,493 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 45,375,598 | 45,287,619 |
Common stock, outstanding | 45,375,598 | 45,287,619 |
Preferred stock | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Series A Convertible Preferred Stock | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, liquidation preference value | $ 100 | $ 100 |
Preferred stock, shares authorized | 150,000 | 150,000 |
Preferred stock, issued | 0 | 0 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Consolidated Statements of Income | ||||
Revenues | $ 90,474 | $ 103,941 | $ 167,673 | $ 188,279 |
Cost of sales | 53,847 | 46,444 | 100,716 | 84,962 |
Gross profit | 36,627 | 57,497 | 66,957 | 103,317 |
Operating expenses: | ||||
Selling, general and administrative | 8,273 | 7,014 | 15,250 | 13,838 |
Amortization | 699 | 699 | 1,397 | 1,397 |
Total operating expenses | 8,972 | 7,713 | 16,647 | 15,235 |
Operating income | 27,655 | 49,784 | 50,310 | 88,082 |
Other expense: | ||||
Net interest expense | 1,899 | 2,623 | 3,748 | 9,928 |
Income before income taxes | 25,756 | 47,161 | 46,562 | 78,154 |
Income tax expense | 6,567 | 7,351 | 11,842 | 8,789 |
Net income | $ 19,189 | $ 39,810 | $ 34,720 | $ 69,365 |
Net income per common share - Basic | $ 0.42 | $ 0.89 | $ 0.77 | $ 1.55 |
Net income per common share - Diluted | $ 0.41 | $ 0.84 | $ 0.73 | $ 1.48 |
Weighted average number of shares outstanding - Basic | 45,339,570 | 44,960,464 | 45,319,155 | 44,870,642 |
Weighted average number of shares outstanding - Diluted | 47,297,419 | 47,152,257 | 47,305,196 | 46,974,441 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Total |
Balance at Dec. 31, 2021 | $ 448 | $ 116,312 | $ (45,821) | $ 70,939 |
Balance (in shares) at Dec. 31, 2021 | 44,758,925 | |||
Issuance of common stock upon exercise of stock options | $ 2 | 121 | 123 | |
Issuance of common stock upon exercise of stock options (in shares) | 261,162 | |||
Excess tax benefits from exercise of stock options | (73) | (73) | ||
Stock compensation expense | 583 | 583 | ||
Net income | 69,365 | 69,365 | ||
Balance at Jun. 30, 2022 | $ 450 | 116,943 | 23,544 | 140,937 |
Balance (in shares) at Jun. 30, 2022 | 45,020,087 | |||
Balance at Dec. 31, 2021 | $ 448 | 116,312 | (45,821) | 70,939 |
Balance (in shares) at Dec. 31, 2021 | 44,758,925 | |||
Balance at Dec. 31, 2022 | $ 453 | 116,442 | 57,980 | 174,875 |
Balance (in shares) at Dec. 31, 2022 | 45,287,619 | |||
Balance at Mar. 31, 2022 | $ 449 | 116,713 | (16,266) | 100,896 |
Balance (in shares) at Mar. 31, 2022 | 44,909,704 | |||
Issuance of common stock upon exercise of stock options | $ 1 | 51 | 52 | |
Issuance of common stock upon exercise of stock options (in shares) | 110,383 | |||
Excess tax benefits from exercise of stock options | (1) | (1) | ||
Stock compensation expense | 180 | 180 | ||
Net income | 39,810 | 39,810 | ||
Balance at Jun. 30, 2022 | $ 450 | 116,943 | 23,544 | 140,937 |
Balance (in shares) at Jun. 30, 2022 | 45,020,087 | |||
Balance at Dec. 31, 2022 | $ 453 | 116,442 | 57,980 | 174,875 |
Balance (in shares) at Dec. 31, 2022 | 45,287,619 | |||
Issuance of common stock upon exercise of stock options | $ 1 | 38 | 39 | |
Issuance of common stock upon exercise of stock options (in shares) | 87,979 | |||
Excess tax benefits from exercise of stock options | (3) | (3) | ||
Stock compensation expense | 1,819 | 1,819 | ||
Net income | 34,720 | 34,720 | ||
Balance at Jun. 30, 2023 | $ 454 | 118,296 | 92,700 | 211,450 |
Balance (in shares) at Jun. 30, 2023 | 45,375,598 | |||
Balance at Mar. 31, 2023 | $ 453 | 117,535 | 73,511 | 191,499 |
Balance (in shares) at Mar. 31, 2023 | 45,328,892 | |||
Issuance of common stock upon exercise of stock options | $ 1 | 1 | ||
Issuance of common stock upon exercise of stock options (in shares) | 46,706 | |||
Excess tax benefits from exercise of stock options | (1) | (1) | ||
Stock compensation expense | 762 | 762 | ||
Net income | 19,189 | 19,189 | ||
Balance at Jun. 30, 2023 | $ 454 | $ 118,296 | $ 92,700 | $ 211,450 |
Balance (in shares) at Jun. 30, 2023 | 45,375,598 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 34,720 | $ 69,365 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation | 1,495 | 1,726 |
Amortization of intangible assets | 1,397 | 1,397 |
Lower of cost or net realizable value reserve | (1,104) | (1,155) |
Allowance for doubtful accounts | 851 | 1,207 |
Stock compensation expense | 1,819 | 583 |
Amortization of deferred finance costs | 538 | 2,004 |
Loss on extinguishment of debt | 4,665 | |
Deferred tax expense (benefit) | 2,917 | (1,602) |
Changes in assets and liabilities: | ||
Trade accounts receivable | (29,037) | (30,727) |
Inventories | 12,037 | (23,366) |
Prepaid and other assets | (5,200) | 1,677 |
Lease obligations | 2 | 15 |
Income taxes receivable | (1,741) | |
Accounts payable and accrued expenses | 2,552 | 8,078 |
Cash provided by operating activities | 21,246 | 33,867 |
Cash flows from investing activities: | ||
Additions to property, plant, and equipment | (837) | (820) |
Cash used in investing activities | (837) | (820) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 39 | 123 |
Excess tax benefits from exercise of stock options | (3) | (73) |
Payment of deferred financing cost | (8,512) | |
Borrowing of short-term debt - net | (15,000) | |
Proceeds from long-term debt | 100,000 | |
Repayment of long-term debt | (14,325) | (92,395) |
Cash used in financing activities | (14,289) | (15,857) |
Increase in cash and cash equivalents | 6,120 | 17,190 |
Cash and cash equivalents at beginning of period | 5,295 | 3,492 |
Cash and cash equivalents at end of period | 11,415 | 20,682 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid during period for interest | 2,952 | 7,911 |
Cash paid for income taxes - net | $ 10,665 | $ 5,908 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 1 - Summary of Significant Accounting Policies Business Hudson Technologies, Inc. (“Hudson” or the “Company”), incorporated under the laws of New York on January 11, 1991, is a refrigerant services company providing innovative solutions to recurring problems within the refrigeration industry. Hudson has proven, reliable programs that meet customer refrigerant needs by providing environmentally sustainable solutions from initial sale of refrigerant gas through recovery, reclamation and reuse, peak operating performance of equipment through energy efficiency and emergency air conditioning and refrigeration system repair, to final refrigerant disposal and carbon credit trading. The Company’s operations consist of one reportable segment. The Company’s products and services are primarily used in commercial air conditioning, industrial processing and refrigeration systems, and include refrigerant and industrial gas sales, refrigerant management services consisting primarily of reclamation of refrigerants and RefrigerantSide® Services performed at a customer’s site. RefrigerantSide® Services consist of system decontamination to remove moisture, oils and other contaminants intended to restore systems to designed capacity. In addition, the Company’s SmartEnergy OPS® service is a web-based real time continuous monitoring service applicable to a facility’s refrigeration systems and other energy systems. The Company’s Chiller Chemistry® and Chill Smart® services are also predictive and diagnostic service offerings. As a component of the Company’s products and services, the Company also participates in the generation of carbon offset projects. The Company operates principally through its wholly-owned subsidiary, Hudson Technologies Company. Unless the context requires otherwise, references to the “Company”, “Hudson”, “we”, “us”, “our”, or similar pronouns refer to Hudson Technologies, Inc. and its subsidiaries. In preparing the accompanying consolidated financial statements, and in accordance with Accounting Standards Codification (“ASC”) 855-10 “Subsequent Events”, the Company’s management has evaluated subsequent events through the date that the financial statements were filed. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and with the instructions of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The financial information included in this quarterly report should be read in conjunction with the Company’s audited financial statements and related notes thereto for the year ended December 31, 2022. Operating results for the six-month period ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. In the opinion of management, all estimates and adjustments considered necessary for a fair presentation have been included and all such adjustments were normal and recurring. AIM Act On September 23, 2021, the United States Environmental Protection Agency (“EPA”) issued the final rule establishing the framework to allocate allowances for virgin production and consumption of hydrofluorocarbon refrigerants (“HFCs”). The EPA is responsible for the administration of the HFC phase down enacted by Congress under the AIM Act. The AIM Act directs the EPA to address the reduction in virgin HFCs and provides authority to do so in three respects: 1) phase down the production and consumption of listed HFCs, 2) manage these HFCs and their substitutes including reclamation of refrigerants, and 3) facilitate the transition to next-generation technologies. Congress required that the EPA consider ways to promote reclamation in all phases of its implementation of the AIM Act. The AIM Act introduces a stepdown of 10% from baseline levels in 2022 and 2023, and establishes a cumulative 40% reduction in the baseline for 2024. Hudson received allocation allowances for calendar years 2022 and 2023 equal to approximately 3 million Metric Tons Exchange Value Equivalents per year, or approximately 1% of the total HFC consumption, with allowances for future periods to be determined at a later date. Reclamation will be critical to maintaining necessary HFC supply levels to ensure an orderly phasedown. Consolidation The consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, represent all companies of which Hudson directly or indirectly has majority ownership or otherwise controls. Significant intercompany accounts and transactions have been eliminated. The Company’s consolidated financial statements include the accounts of wholly-owned subsidiaries Hudson Holdings, Inc. and Hudson Technologies Company. The Company does not present a statement of comprehensive income as its comprehensive income is the same as its net income. Fair Value of Financial Instruments The carrying values of financial instruments including cash, trade accounts receivable and accounts payable approximate fair value at June 30, 2023 and December 31, 2022, because of the relatively short maturity of these instruments. The carrying value of debt approximates fair value, due to the variable rate nature of the debt, as of June 30, 2023 and December 31, 2022. See Note 2 for further details. Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of temporary cash investments and trade accounts receivable. The Company maintains its temporary cash investments in highly-rated financial institutions and, at times, the balances exceed FDIC insurance coverage. The Company’s trade accounts receivable are primarily due from companies throughout the United States. The Company reviews each customer’s credit history before extending credit. The Company establishes an allowance for doubtful accounts based on factors associated with the credit risk of specific accounts, historical trends, and other information. The carrying value of the Company’s accounts receivable is reduced by the established allowance for doubtful accounts. The allowance for doubtful accounts includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve for the remaining accounts receivable balances. The Company adjusts its reserves based on factors that affect the collectability of the accounts receivable balances. For the six month period ended June 30, 2023 there was one customer accounting for greater than 10% of the Company’s revenues and at June 30, 2023 there were $14.6 million of accounts receivable from this customer. For the six-month period ended June 30, 2022 there was no customer accounting for 10% of the Company’s revenues. The loss of a principal customer or a decline in the economic prospects of and/or a reduction in purchases of the Company’s products or services by any such customer could have a material adverse effect on the Company’s operating results and financial position. Cash and Cash Equivalents Temporary investments with original maturities of ninety days or less are included in cash and cash equivalents. Inventories Inventories, consisting primarily of refrigerant products available for sale, are stated at the lower of cost, on a first-in first-out basis, or net realizable value. Where the market price of inventory is less than the related cost, the Company may be required to write down its inventory through a lower of cost or net realizable value adjustment, the impact of which would be reflected in cost of sales on the Consolidated Statements of Operations. Any such adjustment would be based on management’s judgment regarding future demand and market conditions and analysis of historical experience. Property, Plant and Equipment Property, plant and equipment are stated at cost, including internally manufactured equipment. The cost to complete equipment that is under construction is not considered to be material to the Company’s financial position. Provision for depreciation is recorded (for financial reporting purposes) using the straight-line method over the useful lives of the respective assets. Leasehold improvements are amortized on a straight-line basis over the shorter of economic life or terms of the respective leases. Costs of maintenance and repairs are charged to expense when incurred. Due to the specialized nature of the Company’s business, it is possible that the Company’s estimates of equipment useful life periods may change in the future. Goodwill The Company has made acquisitions that included a significant amount of goodwill and other intangible assets. The Company applies the purchase method of accounting for acquisitions, which among other things, requires the recognition of goodwill (which represents the excess of the purchase price of the acquisition over the fair value of the net assets acquired and identified intangible assets). The Company tests its goodwill for impairment annually on a qualitative or quantitative basis (on the first day of the fourth quarter) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of an asset below its carrying value. Goodwill is tested for impairment at the reporting unit level. When performing the annual impairment test, the Company has the option of first performing a qualitative assessment, which requires management to make assumptions affecting a reporting unit, to determine the existence of events and circumstances that would lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If such a conclusion is reached, the Company is then required to perform a quantitative impairment assessment of goodwill. The Company has one reporting unit at June 30, 2023. Other intangible assets that meet certain criteria are amortized over their estimated useful lives. An impairment charge is recorded based on the excess of a reporting unit’s carrying amount over its fair value. An impairment charge would be recognized when the carrying amount exceeds the estimated fair value of a reporting unit. These impairment evaluations use many assumptions and estimates in determining an impairment loss, including certain assumptions and estimates related to future earnings. If the Company does not achieve its earnings objectives, the assumptions and estimates underlying these impairment evaluations could be adversely affected, which could result in an asset impairment charge that would negatively impact operating results. During the fourth quarter of 2022, the Company completed its annual impairment test as of October 1 and determined in its qualitative assessment it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, resulting in no goodwill impairment. There can be no assurances that future sustained declines in macroeconomic or business conditions affecting our industry will not occur, which could result in goodwill impairment charges in future periods. There were no goodwill impairment losses recognized in 2022 or the six months ended June 30, 2023. Leases In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Company accounts for operating leases in accordance with ASU 2016-02. The Company’s accounting for finance leases remained substantially unchanged. See Note 5 for further details and current balances. Cylinder Deposit Liability The cylinder deposit liability, which is included in accrued expenses and other current liabilities on the Company’s Balance Sheet, represents the amount due to customers for the return of refillable cylinders. The Company’s Aspen Refrigerants division (“ARI”) charges its customers cylinder deposits upon the shipment of refrigerant gases that are contained in refillable cylinders. The amount charged to the customer by ARI approximates the cost of a new cylinder of the same size. Upon return of a cylinder, this liability is reduced. The cylinder deposit liability balance was $15.9 million and $13.6 million at June 30, 2023 and December 31, 2022, respectively. Revenues and Cost of Sales The Company’s products and services are primarily used in commercial air conditioning, industrial processing and refrigeration systems. Most of the Company’s revenues are realized from the sale of refrigerant and industrial gases and related products. The Company also generates revenue from refrigerant management services performed at a customer’s site and in-house. The Company conducts its business primarily within the US. The Company applies the FASB’s guidance on revenue recognition, which requires the Company to recognize revenue in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services transferred to its customers. In most instances, the Company’s contract with a customer is the customer’s purchase order and the sales price to the customer is fixed. For certain customers, the Company may also enter into a sales agreement outlining a framework of terms and conditions applicable to future purchase orders received from that customer. Because the Company’s contracts with customers are typically for a single customer purchase order, the duration of the contract is usually less than one year. The Company’s performance obligations related to product sales are satisfied at a point in time, which may occur upon shipment of the product or receipt by the customer, depending on the terms of the arrangement. The Company’s performance obligations related to reclamation and RefrigerantSide® services are generally satisfied at a point in time when the service is performed. Accordingly, revenues are recorded upon the shipment of the product, or in certain instances upon receipt by the customer, or the completion of the service. In July 2016 the Company was awarded, as prime contractor, a five-year contract, including a five-year renewal option, which has been exercised through July 2026, by the United States Defense Logistics Agency (“DLA”) for the management, supply, and sale of refrigerants, compressed gases, cylinders, and related services. Due to the contract containing multiple performance obligations, the Company assessed the arrangement in accordance with ASC 606-10-25-14. The Company determined that the sale of refrigerants and the management services provided under the contract each have stand-alone value. Accordingly, the performance obligation related to the sale of refrigerants is satisfied at a point in time, mainly when the customer receives and obtains control of the product. The performance obligation related to management service revenue is satisfied over time and revenue is recognized on a straight-line basis over the term of the arrangement as the management services are provided. Cost of sales is recorded based on the cost of products shipped or services performed and related direct operating costs of the Company’s facilities. In general, the Company performs shipping and handling services for its customers in connection with the delivery of refrigerant and other products. The Company elected to implement ASC 606-10-25-18B, whereby the Company accounts Income Taxes The Company is taxed at statutory corporate income tax rates after adjusting income reported for financial statement purposes for certain items. Current income tax expense (benefit) reflects the tax results of revenues and expenses currently taxable or deductible. The Company utilizes the asset and liability method of accounting for deferred income taxes, which provides for the recognition of deferred tax assets or liabilities, based on enacted tax rates and laws, for the differences between the financial and income tax reporting bases of assets and liabilities. The tax benefit associated with the Company’s net operating loss carry forwards (“NOLs”) is recognized to the extent that the Company expects to realize future taxable income. During the year ended December 31, 2022, the Company concluded that its deferred tax assets were more likely than not to become realizable. The Company fully reversed its existing valuation allowance of $15.1 million, with $11.6 million reversed during the first and second quarters of 2022, and the remaining $3.5 million through the third and fourth quarters of 2022. The conclusion that a valuation allowance was no longer needed was based on the achievement of three years of cumulative pre-tax income, the utilization of the Company’s $29.3 million federal NOLs, which comprised a majority of the Company’s deferred tax assets, combined with estimates of future years’ pre-tax income that were sufficient to realize the remaining deferred tax assets. As of June 30, 2023, the Company had no federal NOLs, as the Company utilized all of its remaining federal NOLs during the year ended December 31, 2022. As of June 30, 2023, the Company had state tax NOLs of approximately $1.8 million, expiring in various years. We review the likelihood that we will realize the benefit of our deferred tax assets on a quarterly basis. The Company evaluates uncertain tax positions, if any, by determining if it is more likely than not to be sustained upon examination by the taxing authorities. As of June 30, 2023 and December 31, 2022, the Company believes it had no uncertain tax positions. Income per Common and Equivalent Shares If dilutive, common equivalent shares (common shares assuming exercise of options) utilizing the treasury stock method are considered in the presentation of diluted income per share. The reconciliation of shares used to determine net income per share is as follows (dollars in thousands, unaudited): Three Months Six Months ended June 30, ended June 30, 2023 2022 2023 2022 Net income $ 19,189 $ 39,810 $ 34,720 $ 69,365 Weighted average number of shares – basic 45,339,570 44,960,464 45,319,155 44,870,642 Shares underlying options 1,957,849 2,191,793 1,986,041 2,103,799 Weighted average number of shares – diluted 47,297,419 47,152,257 47,305,196 46,974,441 During the three month periods ended June 30, 2023 and 2022, certain options aggregating 602,321 and 752 shares, respectively, have been excluded from the calculation of diluted shares, due to the fact that their effect would be anti-dilutive. During the six month periods ended June 30, 2023 and 2022, certain options aggregating 499,857 and 1,090 shares, respectively, have been excluded from the calculation of diluted shares, due to the fact that their effect would be anti-dilutive. Estimates and Risks The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires the use of estimates and assumptions that affect the amounts reported in these financial statements and footnotes. The Company considers these accounting estimates to be critical in the preparation of the accompanying consolidated financial statements. The Company uses information available at the time the estimates are made. However, these estimates could change materially if different information or assumptions were used. Additionally, these estimates may not ultimately reflect the actual amounts of the final transactions that occur. The Company utilizes both internal and external sources to evaluate potential current and future liabilities for various commitments and contingencies. In the event that the assumptions or conditions change in the future, the estimates could differ from the original estimates. Several of the Company’s accounting policies involve significant judgments, uncertainties, and estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. To the extent that actual results differ from management’s judgments and estimates, there could be a material adverse effect on the Company. On a continuous basis, the Company evaluates its estimates, including, but not limited to, those estimates related to its allowance for doubtful accounts, inventory reserves, goodwill and commitments and contingencies. With respect to trade accounts receivable, the Company estimates the necessary allowance for doubtful accounts based on both historical and anticipated trends of payment history and the ability of the customer to fulfill its obligations. For inventory, the Company evaluates both current and anticipated sales prices of its products to determine if a write down of inventory to net realizable value is necessary. The Company participates in an industry that is highly regulated, and changes in the regulations affecting its business could affect its operating results. Currently the Company purchases virgin hydrofluorocarbon (“HFC”) and hydrofluroolefin (‘HFO”) refrigerants and reclaimable, primarily hydrochlorofluorocarbons (“HCFC”), HFC and chlorofluorocarbon (“CFC”), refrigerants from suppliers and its customers. To the extent that the Company is unable to source sufficient quantities of refrigerants or is unable to obtain refrigerants on commercially reasonable terms or experiences a decline in demand and/or price for refrigerants sold by the Company, the Company could realize reductions in revenue from refrigerant sales, which could have a material adverse effect on its operating results and its financial position. The process of sourcing refrigerants includes various procurement costs, such as freight, processing, insurance, and other costs, relating to the delivery of refrigerants. As a result of the recently noted global supply chain issues, the Company determined it could be exposed to incremental costs related to these refrigerant purchases. These costs represent the Company’s initial estimate that are possibly subject to finalization in future periods and are recorded in accrued expenses and other current liabilities on the consolidated balance sheet as of June 30, 2023. The Company is subject to various legal proceedings. The Company assesses the merit and potential liability associated with each of these proceedings. In addition, the Company estimates potential liability, if any, related to these matters. To the extent that these estimates are not accurate, or circumstances change in the future, the Company could realize liabilities, which could have a material adverse effect on its operating results and its financial position. Impairment of Long-lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less the cost to sell. Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which revises guidance for the accounting for credit losses on financial instruments within its scope, and in November 2018, issued ASU No. 2018-19 and in April 2019, issued ASU No. 2019-04 and in May 2019, issued ASU No. 2019-05, and in November 2019, issued ASU No. 2019-11, which each amended the standard. The new standard introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures. This ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. Entities are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company adopted ASU No. 2016-13 on January 1, 2023. The adoption of ASU No. 2016-13 did not have a material impact on its results of operations or financial position. In August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which is intended to simplify the accounting for convertible instruments by removing certain separation models in Subtopic 470-20, Debt-Debt with Conversion and Other Options, for convertible instruments. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2020-06 on January 1, 2023. The adoption of ASU 2020-06 did not have a material impact on its results of operations or financial position. |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value | |
Fair Value | Note 2 - Fair Value ASC Subtopic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based upon observable inputs used in the valuation techniques, the Company is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values into three broad levels as follows: Level 1: Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities. Level 3: Valuations for assets and liabilities include certain unobservable inputs in the assumptions and projections used in determining the fair value assigned to such assets or liabilities. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2023 | |
Inventories | |
Inventories | Note 3 - Inventories Inventories consist of the following: June 30, December 31, 2023 2022 (unaudited) (in thousands) Refrigerants and cylinders $ 140,631 $ 152,840 Less: net realizable value adjustments (6,187) (7,463) Total $ 134,444 $ 145,377 |
Property, plant and equipment
Property, plant and equipment | 6 Months Ended |
Jun. 30, 2023 | |
Property, plant and equipment | |
Property, plant and equipment | Note 4 - Property, plant and equipment Elements of property, plant and equipment are as follows: June 30, December 31, Estimated 2023 2022 Lives (in thousands) (unaudited) Property, plant and equipment - Land $ 1,255 $ 1,255 - Land improvements 319 319 6-10 years - Buildings 1,446 1,446 25-39 years - Building improvements 3,422 3,396 25-39 years - Cylinders 13,300 13,315 15-30 years - Equipment 28,205 27,258 3-10 years - Equipment under capital lease 315 315 5-7 years - Vehicles 1,736 1,773 3-5 years - Lab and computer equipment, software 3,233 3,103 2-8 years - Furniture & fixtures 930 840 5-10 years - Leasehold improvements 852 852 3-5 years - Construction-in-progress 3,192 3,533 Subtotal 58,205 57,405 Less: Accumulated depreciation (38,296) (36,837) Total $ 19,909 $ 20,568 Depreciation expense for the six months ended June 30, 2023 and 2022 was $1.5 million and $1.7 million, respectively. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2023 | |
Leases | |
Leases | Note 5 - Leases The Company has various lease agreements with terms up to 11 years, including leases of buildings and various equipment. Some leases include options to purchase, terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. At inception, the Company determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. Some of the Company’s lease arrangements contain lease components (e.g. minimum rent payments) and non-lease components (e.g. common area maintenance, charges, utilities and property taxes). The Company elected the package of practical expedients permitted under the transition guidance, which allows it to carry forward its historical lease classification, its assessment on whether a contract contains a lease, and its initial direct costs for any leases that existed prior to the adoption of the new standard. The Company also elected to combine lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value, guarantees or material restrictive covenants. Operating leases are included in Right of use asset, Accrued expenses and other current liabilities, and Long-term lease liabilities on the consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s secured incremental borrowing rates or implicit rates, when readily determinable. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the balance sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Operating lease expense of $1.3 million, for both of the six months ended June 30, 2023 and 2022, is included in Selling, general and administrative expenses on the consolidated statements of operations. The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of June 30, 2023. June 30, Maturity of Lease Payments 2023 (in thousands) (unaudited) 2023 (remaining) $ 1,597 -2024 2,372 -2025 1,994 -2026 1,374 -Thereafter 1,929 Total undiscounted operating lease payments 9,266 Less imputed interest (1,684) Present value of operating lease liabilities $ 7,582 Balance Sheet Classification June 30, 2023 (in thousands) (unaudited) Current lease liabilities (recorded in Accrued expenses and other current liabilities) $ 1,809 Long-term lease liabilities 5,773 Total operating lease liabilities $ 7,582 Other Information June 30, 2023 Weighted-average remaining term for operating leases 3.21 years Weighted-average discount rate for operating leases 8.22 % Cash Flows Cash paid for amounts included in the present value of operating lease liabilities was $1.3 million during the six months ended June 30, 2023 and is included in operating cash flows. |
Goodwill and intangible assets
Goodwill and intangible assets | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and intangible assets | |
Goodwill and intangible assets | Note 6 - Goodwill and intangible assets Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in business combinations accounted for under the purchase method of accounting. There were no goodwill impairment losses recognized for the six-month period ended June 30, 2023, and year ended December 31, 2022. Based on the results of the impairment assessments of goodwill and intangible assets performed, management concluded that the fair value of the Company’s goodwill exceeds the carrying value and that there are no impairment indicators related to intangible assets. At June 30, 2023 and December 31, 2022 the Company had $47.8 million of goodwill. The Company’s other intangible assets consist of the following: June 30, 2023 December 31, 2022 (unaudited) Amortization Gross Gross Period Carrying Accumulated Carrying Accumulated (in thousands) (in years) Amount Amortization Net Amount Amortization Net Intangible assets with determinable lives Covenant not to compete 6 – 10 870 754 116 870 710 160 Customer relationships 3 – 12 31,560 15,821 15,739 31,560 14,491 17,069 Above market leases 13 567 255 312 567 232 335 Total identifiable intangible assets $ 32,997 $ 16,830 $ 16,167 $ 32,997 $ 15,433 $ 17,564 Amortization expense for the six months ended June 30, 2023 and 2022 was $1.4 million for both periods. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Compensation | |
Share-Based Compensation | Note 7 - Share-based compensation Share-based compensation represents the cost related to share-based awards, typically stock options or stock grants, granted to employees, non-employees, officers and directors. Share-based compensation is measured at grant date, based on the estimated aggregate fair value of the award on the grant date, and such amount is charged to compensation expense on a straight-line basis (net of estimated forfeitures) over the requisite service period. For the six month periods ended June 30, 2023 and 2022, share-based compensation expense of $1.8 million and $0.6 million, respectively, is reflected in Selling, general and administrative expenses in the consolidated Income Statements. Share-based awards have historically been made as stock options, and recently also as stock grants, issued pursuant to the terms of the Company’s stock option and stock incentive plans (collectively, the “Plans”), described below. The Plans may be administered by the Board of Directors or the Compensation Committee of the Board or by another committee appointed by the Board from among its members as provided in the Plans. Presently, the Plans are administered by the Company’s Compensation Committee of the Board of Directors. As of June 30, 2023 there were an aggregate of 4,227,261 shares of the Company’s common stock available under the Plans for issuance for future stock option grants or other stock based awards. Stock option awards, which allow the recipient to purchase shares of the Company’s common stock at a fixed price, are typically granted at an exercise price equal to the Company’s stock price at the date of grant. Typically, the Company’s stock option awards have vested from immediately to two years from the grant date and have had a contractual term ranging from three Effective September 17, 2014, the Company adopted its 2014 Stock Incentive Plan (“2014 Plan”) pursuant to which 3,000,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either ISOs under the Code or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs may be granted under the 2014 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights may also be issued in tandem with stock options. Unless the 2014 Plan is sooner terminated, the ability to grant options or other awards under the 2014 Plan will expire on September 17, 2024. Effective June 7, 2018, the Company adopted its 2018 Stock Incentive Plan (“2018 Plan”) pursuant to which 4,000,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either ISOs under the Code or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs may be granted under the 2018 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights may also be issued in tandem with stock options. Unless the 2018 Plan is sooner terminated, the ability to grant options or other awards under the 2018 Plan will expire on June 7, 2028. Effective June 11, 2020, the Company adopted its 2020 Stock Incentive Plan (“2020 Plan”) pursuant to which 3,000,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either ISOs under the Code or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs may be granted under the 2020 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights may also be issued in tandem with stock options. Unless the 2020 Plan is sooner terminated, the ability to grant options or other awards under the 2020 Plan will expire on June 11, 2030. All stock options have been granted to employees and non-employees at exercise prices equal to or in excess of the market value on the date of the grant. The Company determines the fair value of share-based awards at the grant date by using the Black-Scholes option-pricing model, and has utilized the simplified method to compute expected lives of share-based awards. There were options to purchase 585,054 and 354,838 shares of common stock granted during the six month periods ended June 30, 2023 and 2022, respectively. A summary of the activity for stock options issued under the Company’s Plans for the indicated periods is presented below: Weighted Average Exercise Stock Option Plan Totals Shares Price Outstanding at December 31, 2021 2,604,023 $ 1.03 -Cancelled (11,781) $ 3.75 -Exercised (583,273) $ 1.15 -Granted (1) 381,181 $ 4.33 Outstanding at December 31, 2022 2,390,150 $ 1.51 -Cancelled (1,450) $ 10.28 -Exercised (54,751) $ 1.57 -Granted (2) 585,054 $ 10.00 Outstanding at June 30, 2023, unaudited 2,919,003 $ 3.20 (1) Options to purchase 381,181 shares were granted in 2022, of which options to purchase 40,588 shares vested immediately in 2022 and the remainder vested 50 % immediately and 50 % one year after the date of the grants. (2) Options to purchase 567,654 shares were granted in 2023, of which options to purchase 334,005 shares vested immediately in 2023 and the remainder vested 50 % one year after the date of the grants. In addition, 17,400 stock appreciation rights were granted in January 2023 with a six - month vesting period. The following is the weighted average contractual life in years and the weighted average exercise price at June 30, 2023 of: Weighted Average Weighted Remaining Average Number of Contractual Exercise Options Life Price Options outstanding and vested 2,667,043 4.63 years $ 2.56 The intrinsic value of options outstanding at June 30, 2023 and December 31, 2022 was $18.7 million and $20.6 million, respectively. The intrinsic value of options unvested at June 30, 2023 and December 31, 2022 was $0.0 million and $1.1 million, respectively. The intrinsic value of options exercised during the six months ended June 30, 2023 and 2022 was $0.4 million and $1.8 million, respectively. |
Short-term and Long-term debt
Short-term and Long-term debt | 6 Months Ended |
Jun. 30, 2023 | |
Short-term and long-term debt | |
Short-term and Long-term debt | Note 8 - Short-term and Long-term debt Elements of short-term and long-term debt are as follows: June 30, December 31, 2023 2022 (in thousands) (unaudited) Short-term & long-term debt Short-term debt: - Term loan facility – current $ 4,250 $ 4,250 Subtotal 4,250 4,250 Long-term debt: - Term loan facility- net of current portion of long-term debt 13,238 27,563 - FILO term loan 15,000 15,000 - Less: deferred financing costs on term loan (3,153) (3,578) Subtotal 25,085 38,985 Total short-term & long-term debt $ 29,335 $ 43,235 Revolving Credit Facility On March 2, 2022, Hudson Technologies Company (“HTC”) and Hudson Holdings, Inc. (“Holdings”), as borrowers (collectively, the “Borrowers”), and Hudson Technologies, Inc (the “Company”) as a guarantor, entered into an Amended and Restated Credit Agreement (the “Amended Wells Fargo Facility”) with Wells Fargo Bank, National Association, as administrative agent and lender (“Agent” or “Wells Fargo”) and such other lenders as have or may thereafter become a party to the Amended Wells Fargo Facility. The Amended Wells Fargo facility amended and restated the prior Wells Fargo Facility entered into on December 19, 2019. Under the terms of the Amended Wells Fargo Facility, the Borrowers may borrow up to $90 million consisting of: (i) $15 million immediately borrowed in the form of a “first in last out” term loan (the “FILO Tranche”) and (ii) from time to time, up to $75 million at any time consisting of revolving loans (the “Revolving Loans”) in a maximum amount up to the lesser of $75 million and a borrowing base that is calculated based on the outstanding amount of the Borrowers’ eligible receivables and eligible inventory, as described in the Amended Wells Fargo Facility. The Amended Wells Fargo Facility also contains a sublimit of $9 million for swing line loans and $2 million for letters of credit. The Company currently has a $0.9 million letter of credit outstanding. Amounts borrowed under the Amended Wells Fargo Facility may be used for working capital needs, certain permitted acquisitions, and to reimburse drawings under letters of credit. Interest under the Amended Wells Fargo Facility is payable in arrears on the first day of each month. Interest charges with respect to Revolving Loans are computed on the actual principal amount of Revolving Loans outstanding at a rate per annum equal to (A) with respect to Base Rate loans, the sum of (i) a rate per annum equal to the higher of (1) 1.0%, (2) the federal funds rate plus 0.5%, (3) one month term SOFR plus 1.0%, and (4) the prime commercial lending rate of Wells Fargo, plus (ii) between 1.25% and 1.75% depending on average monthly undrawn availability and (B) with respect to SOFR loans, the sum of the applicable SOFR rate plus between 2.36% and 2.86% depending on average quarterly undrawn availability. Interest charges with respect to the FILO Tranche are computed on the actual principal amount of FILO Tranche loans outstanding at a rate per annum equal to (A) with respect to Base Rate FILO Tranche loans, the sum of (i) a rate per annum equal to the higher of (1) 1.0%, (2) the federal funds rate plus 0.5%, (3) one month term SOFR plus 1.0%,and (4) the prime commercial lending rate of Wells Fargo, plus (ii) 6.5% and (B) with respect to SOFR FILO Tranche loans, the sum of the applicable SOFR rate plus 7.50%. The Amended Wells Fargo Facility also includes a monthly unused line fee ranging from 0.35% to 0.75% per annum determined based upon the level of average Revolving Loans outstanding during the immediately preceding month measured against the total Revolving Loans that may be borrowed under the Amended Wells Fargo Facility. In connection with the closing of the Amended Wells Fargo Facility, the Company also entered into a First Amendment to Guaranty and Security Agreement, dated as of March 2, 2022 (the “Amended Revolver Guaranty and Security Agreement”), pursuant to which the Company and certain subsidiaries are continuing to unconditionally guarantee the payment and performance of all obligations owing by Borrowers to Wells Fargo, as Agent for the benefit of the revolving lenders. Pursuant to the Amended Revolver Guaranty and Security Agreement, Borrowers, the Company and certain other subsidiaries are continuing to grant to the Agent, for the benefit of the Wells Fargo Facility lenders, a security interest in substantially all of their respective assets, including receivables, equipment, general intangibles (including intellectual property), inventory, subsidiary stock, real property, and certain other assets. 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 two The Amended Wells Fargo Facility also contains customary non-financial covenants relating to the Company and the Borrowers, including limitations on Borrowers’ ability to pay dividends on common stock or preferred stock, and also includes certain events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees and a change of control. The Company evaluated the Amended Wells Fargo Facility in accordance with the provisions of ASC 470 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. The commitments under the Amended Wells Fargo Facility will expire and the full outstanding principal amount of the loans, together with accrued and unpaid interest, are due and payable in full on March 2, 2027, unless the commitments are terminated and the outstanding principal amount of the loans are accelerated sooner following an event of default or in the event of certain other cross-defaults. 2022 Term Loan Facility On March 2, 2022, Hudson Technologies Company (“HTC”), an indirect subsidiary of Hudson Technologies, Inc. (the “Company”), and the Company’s subsidiary Hudson Holdings, Inc., as borrowers (collectively, the “Borrowers”), and the Company, as guarantor, became obligated under a Credit Agreement (the “Term Loan Facility”) with TCW Asset Management Company LLC, as administrative agent (“Term Loan Agent”) and the lender parties thereto (the “Term Loan Lenders”). Under the terms of the Term Loan Facility, the Borrowers immediately borrowed $85 million pursuant to a term loan (the “Term Loan”). Amounts borrowed under the Term Loan Facility were used by the Borrowers to repay the outstanding principal amount and related fees and expenses under the Prior Term Loan Facility (as defined below) and for other corporate purposes. The Company paid approximately $4.3 million of term loan deferred financing costs. The Term Loan matures on March 2, 2027, or earlier upon certain acceleration or cross default events. Principal payments on the Term Loan are required on a quarterly basis, commencing with the quarter ended March 31, 2022, in the amount of 5% of the original principal amount of the outstanding Term Loan per annum. The Term Loan Facility also requires annual payments of 50% of Excess Cash Flow (as defined in the Term Loan Facility); provided that commencing with the year ending December 31, 2023 such payments may be reduced depending upon the Company’s leverage ratio (as defined in the Term Loan Facility) for the applicable year. The Term Loan Facility also requires mandatory prepayments of the Term Loan in the event of certain asset dispositions, debt issuances, and other events. The Term Loan may be prepaid at the option of the Borrowers subject to a prepayment premium of 3% in year one, 2% in year two,1% in year three, and zero in year four and thereafter. Interest on the Term Loan is generally payable monthly, in arrears. Interest charges with respect to the Term Loan are computed on the actual principal amount of the Term Loan outstanding at a rate per annum equal to (A) with respect to Base Rate loans, the sum of (i) a rate per annum equal to the higher of (1) 2.0%, (2) the federal funds rate plus 0.5%, (3) one month term SOFR plus 1.0%, and (4) the prime commercial lending rate quoted by The Wall Street Journal, plus (ii) between 6.0% and 7.0% depending on the applicable leverage ratio and (B) with respect to SOFR loans, the sum of the applicable SOFR rate plus between 7.0% and 8.0% depending on the applicable leverage ratio. Borrowers and the Company granted to the Term Loan Agent, for the benefit of the Term Loan Lenders, a security interest in substantially all of their respective assets, including receivables, equipment, general intangibles (including intellectual property), inventory, subsidiary stock, real property, and certain other assets. The Term Loan Facility contains a fixed charge coverage ratio covenant and a leverage ratio covenant, each tested quarterly. The fixed charge coverage ratio (“FCCR”) covenant requires compliance with specified levels of (i) EBITDA minus unfunded capital expenditures to (ii) interest expense, scheduled principal payments, and other specified payments, in each case as specified in the Term Loan Facility, for a trailing four quarter period. For the period ended June 30, 2023, the FCCR was 3.13 to 1.0 against a requirement of at least 1.10 to 1.0. The leverage ratio (“LR”) covenant is tested as of the last day of each fiscal quarter. The LR is the ratio of (i) funded debt as of such date minus the lesser of $15,000,000 or the Company’s unrestricted cash to (b) trailing twelve-month EBITDA, in each case as specified in the Term Loan Facility. As of June 30, 2023, the LR was approximately 0.32 to 1.0, compared to the maximum of 4.00 to 1.0. The Term Loan Facility also contains customary non-financial covenants relating to the Company and the Borrowers, including limitations on Borrowers’ ability to pay dividends on common stock or preferred stock, and also includes certain events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees and a change of control. In connection with the closing of the Term Loan Facility, the Company also entered into a Guaranty and Security Agreement, dated as of March 2, 2022 (the “Term Loan Guarantee”), pursuant to which the Company affirmed its unconditional guarantee of the payment and performance of all obligations owing by Borrowers to Term Loan Agent, as agent for the benefit of the Term Loan Lenders. The Term Loan Agent and the Agent have entered into an intercreditor agreement governing the relative priority of their security interests granted by the Borrowers and the Guarantor in the collateral, providing that the Agent shall have a first priority security interest in the accounts receivable, inventory, deposit accounts and certain other assets (the “Revolving Credit Priority Collateral”) and the Term Loan Agent shall have a first priority security interest in the equipment, real property, capital stock of subsidiaries and certain other assets (the “Term Loan Priority Collateral”). Termination of Prior Term Loan Facility In conjunction with entry into the new Term Loan Facility as described above, on March 2, 2022 the Company’s then-existing term loans, as amended (the “Prior Term Loan Facility”), which had a principal balance of approximately $63.9 million after payment of a $16.0 million excess cash flow amount thereunder, were repaid in full, together with associated required lender fees and expenses of $3.3 million, and the Prior Term Loan Facility was terminated. The termination of the Prior Term Loan Facility constituted an extinguishment of debt, which resulted in the Company recording an additional $4.6 million of interest expense during the first quarter of 2022, which included the aforementioned $3.3 million of prior lender fees and expenses and $1.3 million of pre-existing deferred financing costs from the Prior Term Loan Facility. The Company was in compliance with all covenants, under the Amended Wells Fargo Facility and the Term Loan Facility, as of June 30, 2023. 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. 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(R) 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. Scheduled maturities of the Company’s long-term debt and capital lease obligations are as follows: Years ended June 30, Amount (in thousands) -2024 $ 4,250 -2025 4,250 -2026 4,250 -2027 19,738 Total $ 32,488 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies | |
Business | Business Hudson Technologies, Inc. (“Hudson” or the “Company”), incorporated under the laws of New York on January 11, 1991, is a refrigerant services company providing innovative solutions to recurring problems within the refrigeration industry. Hudson has proven, reliable programs that meet customer refrigerant needs by providing environmentally sustainable solutions from initial sale of refrigerant gas through recovery, reclamation and reuse, peak operating performance of equipment through energy efficiency and emergency air conditioning and refrigeration system repair, to final refrigerant disposal and carbon credit trading. The Company’s operations consist of one reportable segment. The Company’s products and services are primarily used in commercial air conditioning, industrial processing and refrigeration systems, and include refrigerant and industrial gas sales, refrigerant management services consisting primarily of reclamation of refrigerants and RefrigerantSide® Services performed at a customer’s site. RefrigerantSide® Services consist of system decontamination to remove moisture, oils and other contaminants intended to restore systems to designed capacity. In addition, the Company’s SmartEnergy OPS® service is a web-based real time continuous monitoring service applicable to a facility’s refrigeration systems and other energy systems. The Company’s Chiller Chemistry® and Chill Smart® services are also predictive and diagnostic service offerings. As a component of the Company’s products and services, the Company also participates in the generation of carbon offset projects. The Company operates principally through its wholly-owned subsidiary, Hudson Technologies Company. Unless the context requires otherwise, references to the “Company”, “Hudson”, “we”, “us”, “our”, or similar pronouns refer to Hudson Technologies, Inc. and its subsidiaries. In preparing the accompanying consolidated financial statements, and in accordance with Accounting Standards Codification (“ASC”) 855-10 “Subsequent Events”, the Company’s management has evaluated subsequent events through the date that the financial statements were filed. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and with the instructions of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The financial information included in this quarterly report should be read in conjunction with the Company’s audited financial statements and related notes thereto for the year ended December 31, 2022. Operating results for the six-month period ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. In the opinion of management, all estimates and adjustments considered necessary for a fair presentation have been included and all such adjustments were normal and recurring. AIM Act On September 23, 2021, the United States Environmental Protection Agency (“EPA”) issued the final rule establishing the framework to allocate allowances for virgin production and consumption of hydrofluorocarbon refrigerants (“HFCs”). The EPA is responsible for the administration of the HFC phase down enacted by Congress under the AIM Act. The AIM Act directs the EPA to address the reduction in virgin HFCs and provides authority to do so in three respects: 1) phase down the production and consumption of listed HFCs, 2) manage these HFCs and their substitutes including reclamation of refrigerants, and 3) facilitate the transition to next-generation technologies. Congress required that the EPA consider ways to promote reclamation in all phases of its implementation of the AIM Act. The AIM Act introduces a stepdown of 10% from baseline levels in 2022 and 2023, and establishes a cumulative 40% reduction in the baseline for 2024. Hudson received allocation allowances for calendar years 2022 and 2023 equal to approximately 3 million Metric Tons Exchange Value Equivalents per year, or approximately 1% of the total HFC consumption, with allowances for future periods to be determined at a later date. Reclamation will be critical to maintaining necessary HFC supply levels to ensure an orderly phasedown. |
Consolidation | Consolidation The consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, represent all companies of which Hudson directly or indirectly has majority ownership or otherwise controls. Significant intercompany accounts and transactions have been eliminated. The Company’s consolidated financial statements include the accounts of wholly-owned subsidiaries Hudson Holdings, Inc. and Hudson Technologies Company. The Company does not present a statement of comprehensive income as its comprehensive income is the same as its net income. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying values of financial instruments including cash, trade accounts receivable and accounts payable approximate fair value at June 30, 2023 and December 31, 2022, because of the relatively short maturity of these instruments. The carrying value of debt approximates fair value, due to the variable rate nature of the debt, as of June 30, 2023 and December 31, 2022. See Note 2 for further details. |
Credit Risk | Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of temporary cash investments and trade accounts receivable. The Company maintains its temporary cash investments in highly-rated financial institutions and, at times, the balances exceed FDIC insurance coverage. The Company’s trade accounts receivable are primarily due from companies throughout the United States. The Company reviews each customer’s credit history before extending credit. The Company establishes an allowance for doubtful accounts based on factors associated with the credit risk of specific accounts, historical trends, and other information. The carrying value of the Company’s accounts receivable is reduced by the established allowance for doubtful accounts. The allowance for doubtful accounts includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve for the remaining accounts receivable balances. The Company adjusts its reserves based on factors that affect the collectability of the accounts receivable balances. For the six month period ended June 30, 2023 there was one customer accounting for greater than 10% of the Company’s revenues and at June 30, 2023 there were $14.6 million of accounts receivable from this customer. For the six-month period ended June 30, 2022 there was no customer accounting for 10% of the Company’s revenues. The loss of a principal customer or a decline in the economic prospects of and/or a reduction in purchases of the Company’s products or services by any such customer could have a material adverse effect on the Company’s operating results and financial position. |
Cash and Cash Equivalents | Cash and Cash Equivalents Temporary investments with original maturities of ninety days or less are included in cash and cash equivalents. |
Inventories | Inventories Inventories, consisting primarily of refrigerant products available for sale, are stated at the lower of cost, on a first-in first-out basis, or net realizable value. Where the market price of inventory is less than the related cost, the Company may be required to write down its inventory through a lower of cost or net realizable value adjustment, the impact of which would be reflected in cost of sales on the Consolidated Statements of Operations. Any such adjustment would be based on management’s judgment regarding future demand and market conditions and analysis of historical experience. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are stated at cost, including internally manufactured equipment. The cost to complete equipment that is under construction is not considered to be material to the Company’s financial position. Provision for depreciation is recorded (for financial reporting purposes) using the straight-line method over the useful lives of the respective assets. Leasehold improvements are amortized on a straight-line basis over the shorter of economic life or terms of the respective leases. Costs of maintenance and repairs are charged to expense when incurred. Due to the specialized nature of the Company’s business, it is possible that the Company’s estimates of equipment useful life periods may change in the future. |
Goodwill | Goodwill The Company has made acquisitions that included a significant amount of goodwill and other intangible assets. The Company applies the purchase method of accounting for acquisitions, which among other things, requires the recognition of goodwill (which represents the excess of the purchase price of the acquisition over the fair value of the net assets acquired and identified intangible assets). The Company tests its goodwill for impairment annually on a qualitative or quantitative basis (on the first day of the fourth quarter) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of an asset below its carrying value. Goodwill is tested for impairment at the reporting unit level. When performing the annual impairment test, the Company has the option of first performing a qualitative assessment, which requires management to make assumptions affecting a reporting unit, to determine the existence of events and circumstances that would lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If such a conclusion is reached, the Company is then required to perform a quantitative impairment assessment of goodwill. The Company has one reporting unit at June 30, 2023. Other intangible assets that meet certain criteria are amortized over their estimated useful lives. An impairment charge is recorded based on the excess of a reporting unit’s carrying amount over its fair value. An impairment charge would be recognized when the carrying amount exceeds the estimated fair value of a reporting unit. These impairment evaluations use many assumptions and estimates in determining an impairment loss, including certain assumptions and estimates related to future earnings. If the Company does not achieve its earnings objectives, the assumptions and estimates underlying these impairment evaluations could be adversely affected, which could result in an asset impairment charge that would negatively impact operating results. During the fourth quarter of 2022, the Company completed its annual impairment test as of October 1 and determined in its qualitative assessment it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, resulting in no goodwill impairment. There can be no assurances that future sustained declines in macroeconomic or business conditions affecting our industry will not occur, which could result in goodwill impairment charges in future periods. There were no goodwill impairment losses recognized in 2022 or the six months ended June 30, 2023. |
Leases | Leases In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Company accounts for operating leases in accordance with ASU 2016-02. The Company’s accounting for finance leases remained substantially unchanged. See Note 5 for further details and current balances. |
Cylinder Deposit Liability | Cylinder Deposit Liability The cylinder deposit liability, which is included in accrued expenses and other current liabilities on the Company’s Balance Sheet, represents the amount due to customers for the return of refillable cylinders. The Company’s Aspen Refrigerants division (“ARI”) charges its customers cylinder deposits upon the shipment of refrigerant gases that are contained in refillable cylinders. The amount charged to the customer by ARI approximates the cost of a new cylinder of the same size. Upon return of a cylinder, this liability is reduced. The cylinder deposit liability balance was $15.9 million and $13.6 million at June 30, 2023 and December 31, 2022, respectively. |
Revenues and Cost of Sales | Revenues and Cost of Sales The Company’s products and services are primarily used in commercial air conditioning, industrial processing and refrigeration systems. Most of the Company’s revenues are realized from the sale of refrigerant and industrial gases and related products. The Company also generates revenue from refrigerant management services performed at a customer’s site and in-house. The Company conducts its business primarily within the US. The Company applies the FASB’s guidance on revenue recognition, which requires the Company to recognize revenue in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services transferred to its customers. In most instances, the Company’s contract with a customer is the customer’s purchase order and the sales price to the customer is fixed. For certain customers, the Company may also enter into a sales agreement outlining a framework of terms and conditions applicable to future purchase orders received from that customer. Because the Company’s contracts with customers are typically for a single customer purchase order, the duration of the contract is usually less than one year. The Company’s performance obligations related to product sales are satisfied at a point in time, which may occur upon shipment of the product or receipt by the customer, depending on the terms of the arrangement. The Company’s performance obligations related to reclamation and RefrigerantSide® services are generally satisfied at a point in time when the service is performed. Accordingly, revenues are recorded upon the shipment of the product, or in certain instances upon receipt by the customer, or the completion of the service. In July 2016 the Company was awarded, as prime contractor, a five-year contract, including a five-year renewal option, which has been exercised through July 2026, by the United States Defense Logistics Agency (“DLA”) for the management, supply, and sale of refrigerants, compressed gases, cylinders, and related services. Due to the contract containing multiple performance obligations, the Company assessed the arrangement in accordance with ASC 606-10-25-14. The Company determined that the sale of refrigerants and the management services provided under the contract each have stand-alone value. Accordingly, the performance obligation related to the sale of refrigerants is satisfied at a point in time, mainly when the customer receives and obtains control of the product. The performance obligation related to management service revenue is satisfied over time and revenue is recognized on a straight-line basis over the term of the arrangement as the management services are provided. Cost of sales is recorded based on the cost of products shipped or services performed and related direct operating costs of the Company’s facilities. In general, the Company performs shipping and handling services for its customers in connection with the delivery of refrigerant and other products. The Company elected to implement ASC 606-10-25-18B, whereby the Company accounts |
Income Taxes | Income Taxes The Company is taxed at statutory corporate income tax rates after adjusting income reported for financial statement purposes for certain items. Current income tax expense (benefit) reflects the tax results of revenues and expenses currently taxable or deductible. The Company utilizes the asset and liability method of accounting for deferred income taxes, which provides for the recognition of deferred tax assets or liabilities, based on enacted tax rates and laws, for the differences between the financial and income tax reporting bases of assets and liabilities. The tax benefit associated with the Company’s net operating loss carry forwards (“NOLs”) is recognized to the extent that the Company expects to realize future taxable income. During the year ended December 31, 2022, the Company concluded that its deferred tax assets were more likely than not to become realizable. The Company fully reversed its existing valuation allowance of $15.1 million, with $11.6 million reversed during the first and second quarters of 2022, and the remaining $3.5 million through the third and fourth quarters of 2022. The conclusion that a valuation allowance was no longer needed was based on the achievement of three years of cumulative pre-tax income, the utilization of the Company’s $29.3 million federal NOLs, which comprised a majority of the Company’s deferred tax assets, combined with estimates of future years’ pre-tax income that were sufficient to realize the remaining deferred tax assets. As of June 30, 2023, the Company had no federal NOLs, as the Company utilized all of its remaining federal NOLs during the year ended December 31, 2022. As of June 30, 2023, the Company had state tax NOLs of approximately $1.8 million, expiring in various years. We review the likelihood that we will realize the benefit of our deferred tax assets on a quarterly basis. The Company evaluates uncertain tax positions, if any, by determining if it is more likely than not to be sustained upon examination by the taxing authorities. As of June 30, 2023 and December 31, 2022, the Company believes it had no uncertain tax positions. |
Income per Common and Equivalent Shares | Income per Common and Equivalent Shares If dilutive, common equivalent shares (common shares assuming exercise of options) utilizing the treasury stock method are considered in the presentation of diluted income per share. The reconciliation of shares used to determine net income per share is as follows (dollars in thousands, unaudited): Three Months Six Months ended June 30, ended June 30, 2023 2022 2023 2022 Net income $ 19,189 $ 39,810 $ 34,720 $ 69,365 Weighted average number of shares – basic 45,339,570 44,960,464 45,319,155 44,870,642 Shares underlying options 1,957,849 2,191,793 1,986,041 2,103,799 Weighted average number of shares – diluted 47,297,419 47,152,257 47,305,196 46,974,441 During the three month periods ended June 30, 2023 and 2022, certain options aggregating 602,321 and 752 shares, respectively, have been excluded from the calculation of diluted shares, due to the fact that their effect would be anti-dilutive. During the six month periods ended June 30, 2023 and 2022, certain options aggregating 499,857 and 1,090 shares, respectively, have been excluded from the calculation of diluted shares, due to the fact that their effect would be anti-dilutive. |
Estimates and Risks | Estimates and Risks The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires the use of estimates and assumptions that affect the amounts reported in these financial statements and footnotes. The Company considers these accounting estimates to be critical in the preparation of the accompanying consolidated financial statements. The Company uses information available at the time the estimates are made. However, these estimates could change materially if different information or assumptions were used. Additionally, these estimates may not ultimately reflect the actual amounts of the final transactions that occur. The Company utilizes both internal and external sources to evaluate potential current and future liabilities for various commitments and contingencies. In the event that the assumptions or conditions change in the future, the estimates could differ from the original estimates. Several of the Company’s accounting policies involve significant judgments, uncertainties, and estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. To the extent that actual results differ from management’s judgments and estimates, there could be a material adverse effect on the Company. On a continuous basis, the Company evaluates its estimates, including, but not limited to, those estimates related to its allowance for doubtful accounts, inventory reserves, goodwill and commitments and contingencies. With respect to trade accounts receivable, the Company estimates the necessary allowance for doubtful accounts based on both historical and anticipated trends of payment history and the ability of the customer to fulfill its obligations. For inventory, the Company evaluates both current and anticipated sales prices of its products to determine if a write down of inventory to net realizable value is necessary. The Company participates in an industry that is highly regulated, and changes in the regulations affecting its business could affect its operating results. Currently the Company purchases virgin hydrofluorocarbon (“HFC”) and hydrofluroolefin (‘HFO”) refrigerants and reclaimable, primarily hydrochlorofluorocarbons (“HCFC”), HFC and chlorofluorocarbon (“CFC”), refrigerants from suppliers and its customers. To the extent that the Company is unable to source sufficient quantities of refrigerants or is unable to obtain refrigerants on commercially reasonable terms or experiences a decline in demand and/or price for refrigerants sold by the Company, the Company could realize reductions in revenue from refrigerant sales, which could have a material adverse effect on its operating results and its financial position. The process of sourcing refrigerants includes various procurement costs, such as freight, processing, insurance, and other costs, relating to the delivery of refrigerants. As a result of the recently noted global supply chain issues, the Company determined it could be exposed to incremental costs related to these refrigerant purchases. These costs represent the Company’s initial estimate that are possibly subject to finalization in future periods and are recorded in accrued expenses and other current liabilities on the consolidated balance sheet as of June 30, 2023. The Company is subject to various legal proceedings. The Company assesses the merit and potential liability associated with each of these proceedings. In addition, the Company estimates potential liability, if any, related to these matters. To the extent that these estimates are not accurate, or circumstances change in the future, the Company could realize liabilities, which could have a material adverse effect on its operating results and its financial position. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less the cost to sell. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which revises guidance for the accounting for credit losses on financial instruments within its scope, and in November 2018, issued ASU No. 2018-19 and in April 2019, issued ASU No. 2019-04 and in May 2019, issued ASU No. 2019-05, and in November 2019, issued ASU No. 2019-11, which each amended the standard. The new standard introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures. This ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. Entities are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company adopted ASU No. 2016-13 on January 1, 2023. The adoption of ASU No. 2016-13 did not have a material impact on its results of operations or financial position. In August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which is intended to simplify the accounting for convertible instruments by removing certain separation models in Subtopic 470-20, Debt-Debt with Conversion and Other Options, for convertible instruments. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2020-06 on January 1, 2023. The adoption of ASU 2020-06 did not have a material impact on its results of operations or financial position. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies | |
Schedule of reconciliation of shares used to determine net income per share | The reconciliation of shares used to determine net income per share is as follows (dollars in thousands, unaudited): Three Months Six Months ended June 30, ended June 30, 2023 2022 2023 2022 Net income $ 19,189 $ 39,810 $ 34,720 $ 69,365 Weighted average number of shares – basic 45,339,570 44,960,464 45,319,155 44,870,642 Shares underlying options 1,957,849 2,191,793 1,986,041 2,103,799 Weighted average number of shares – diluted 47,297,419 47,152,257 47,305,196 46,974,441 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Inventories | |
Schedule of inventories | June 30, December 31, 2023 2022 (unaudited) (in thousands) Refrigerants and cylinders $ 140,631 $ 152,840 Less: net realizable value adjustments (6,187) (7,463) Total $ 134,444 $ 145,377 |
Property, plant and equipment (
Property, plant and equipment (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Property, plant and equipment | |
Schedule of elements of property, plant and equipment | June 30, December 31, Estimated 2023 2022 Lives (in thousands) (unaudited) Property, plant and equipment - Land $ 1,255 $ 1,255 - Land improvements 319 319 6-10 years - Buildings 1,446 1,446 25-39 years - Building improvements 3,422 3,396 25-39 years - Cylinders 13,300 13,315 15-30 years - Equipment 28,205 27,258 3-10 years - Equipment under capital lease 315 315 5-7 years - Vehicles 1,736 1,773 3-5 years - Lab and computer equipment, software 3,233 3,103 2-8 years - Furniture & fixtures 930 840 5-10 years - Leasehold improvements 852 852 3-5 years - Construction-in-progress 3,192 3,533 Subtotal 58,205 57,405 Less: Accumulated depreciation (38,296) (36,837) Total $ 19,909 $ 20,568 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases | |
Schedule of maturity of lease payments | June 30, Maturity of Lease Payments 2023 (in thousands) (unaudited) 2023 (remaining) $ 1,597 -2024 2,372 -2025 1,994 -2026 1,374 -Thereafter 1,929 Total undiscounted operating lease payments 9,266 Less imputed interest (1,684) Present value of operating lease liabilities $ 7,582 |
Schedule of balance sheet classification of lease liabilities | June 30, 2023 (in thousands) (unaudited) Current lease liabilities (recorded in Accrued expenses and other current liabilities) $ 1,809 Long-term lease liabilities 5,773 Total operating lease liabilities $ 7,582 |
Schedule of other information of operating leases | June 30, 2023 Weighted-average remaining term for operating leases 3.21 years Weighted-average discount rate for operating leases 8.22 % |
Goodwill and intangible assets
Goodwill and intangible assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and intangible assets | |
Schedule of company's other intangible assets | June 30, 2023 December 31, 2022 (unaudited) Amortization Gross Gross Period Carrying Accumulated Carrying Accumulated (in thousands) (in years) Amount Amortization Net Amount Amortization Net Intangible assets with determinable lives Covenant not to compete 6 – 10 870 754 116 870 710 160 Customer relationships 3 – 12 31,560 15,821 15,739 31,560 14,491 17,069 Above market leases 13 567 255 312 567 232 335 Total identifiable intangible assets $ 32,997 $ 16,830 $ 16,167 $ 32,997 $ 15,433 $ 17,564 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Compensation | |
Schedule of of the activity for stock options issued | Weighted Average Exercise Stock Option Plan Totals Shares Price Outstanding at December 31, 2021 2,604,023 $ 1.03 -Cancelled (11,781) $ 3.75 -Exercised (583,273) $ 1.15 -Granted (1) 381,181 $ 4.33 Outstanding at December 31, 2022 2,390,150 $ 1.51 -Cancelled (1,450) $ 10.28 -Exercised (54,751) $ 1.57 -Granted (2) 585,054 $ 10.00 Outstanding at June 30, 2023, unaudited 2,919,003 $ 3.20 (1) Options to purchase 381,181 shares were granted in 2022, of which options to purchase 40,588 shares vested immediately in 2022 and the remainder vested 50 % immediately and 50 % one year after the date of the grants. (2) Options to purchase 567,654 shares were granted in 2023, of which options to purchase 334,005 shares vested immediately in 2023 and the remainder vested 50 % one year after the date of the grants. In addition, 17,400 stock appreciation rights were granted in January 2023 with a six - month vesting period. |
Schedule of weighted average contractual life in years and the weighted average exercise price | Weighted Average Weighted Remaining Average Number of Contractual Exercise Options Life Price Options outstanding and vested 2,667,043 4.63 years $ 2.56 |
Short-term and Long-term debt (
Short-term and Long-term debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Short-term and long-term debt | |
Schedule of short-term and long-term debt | June 30, December 31, 2023 2022 (in thousands) (unaudited) Short-term & long-term debt Short-term debt: - Term loan facility – current $ 4,250 $ 4,250 Subtotal 4,250 4,250 Long-term debt: - Term loan facility- net of current portion of long-term debt 13,238 27,563 - FILO term loan 15,000 15,000 - Less: deferred financing costs on term loan (3,153) (3,578) Subtotal 25,085 38,985 Total short-term & long-term debt $ 29,335 $ 43,235 |
Schedule of maturities of long-term debt and capital lease obligations | Years ended June 30, Amount (in thousands) -2024 $ 4,250 -2025 4,250 -2026 4,250 -2027 19,738 Total $ 32,488 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) T in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2023 USD ($) shares | Mar. 31, 2023 item | Jun. 30, 2022 USD ($) shares | Jun. 30, 2023 USD ($) segment T shares | Jun. 30, 2022 USD ($) shares | Dec. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) | |
Significant accounting policies | ||||||||
Number of reportable segments | segment | 1 | |||||||
Stepdown from baseline levels, final rule | 10% | |||||||
Cumulative reduction in baseline, subsequent allowance | 40% | |||||||
Allocation allowance received | T | 3 | |||||||
Allocation allowance received as a percentage of total HFC consumption | 1% | |||||||
Number of reporting unit | item | 1 | |||||||
Goodwill impairment loss | $ 0 | $ 0 | ||||||
Cylinder deposit liability | $ 15,900,000 | 15,900,000 | 13,600,000 | |||||
Operating loss carryforwards | $ 1,800,000 | $ 1,800,000 | ||||||
Deferred tax assets, valuation allowance | $ 11,600,000 | $ 11,600,000 | 3,500,000 | $ 3,500,000 | $ 15,100,000 | |||
Options excluded from the calculation of diluted shares | shares | 602,321 | 752 | 499,857 | 1,090 | ||||
Federal | ||||||||
Significant accounting policies | ||||||||
Operating loss carryforwards | $ 0 | $ 0 | ||||||
Current year utilization comprise of deferred tax | $ 29,300,000 | |||||||
Customer Concentration Risk | No Customer | Revenue from Contract with Customer | ||||||||
Significant accounting policies | ||||||||
Concentration risk percentage | 10% | |||||||
Customer Concentration Risk | One Customer | Revenue from Contract with Customer | ||||||||
Significant accounting policies | ||||||||
Accounts receivable | $ 14,600,000 | $ 14,600,000 | ||||||
Customer Concentration Risk | One Customer | Accounts Receivable | ||||||||
Significant accounting policies | ||||||||
Accounts receivable | $ 10,000,000 | $ 10,000,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Reconciliation of shares used to determine net income per share (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Summary of Significant Accounting Policies | ||||
Net income | $ 19,189 | $ 39,810 | $ 34,720 | $ 69,365 |
Weighted average number of shares - basic | 45,339,570 | 44,960,464 | 45,319,155 | 44,870,642 |
Shares underlying options | 1,957,849 | 2,191,793 | 1,986,041 | 2,103,799 |
Weighted average number of shares outstanding - diluted | 47,297,419 | 47,152,257 | 47,305,196 | 46,974,441 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Inventories | ||
Refrigerants and cylinders | $ 140,631 | $ 152,840 |
Less: net realizable value adjustments | (6,187) | (7,463) |
Total | $ 134,444 | $ 145,377 |
Property, plant and equipment -
Property, plant and equipment - Summary of elements of property, plant and equipment (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Property, plant and equipment | |||
Subtotal | $ 58,205 | $ 57,405 | |
Less: Accumulated depreciation | (38,296) | (36,837) | |
Total | 19,909 | 20,568 | |
Depreciation expense | 1,500 | $ 1,700 | |
Land | |||
Property, plant and equipment | |||
Subtotal | 1,255 | 1,255 | |
Land improvements | |||
Property, plant and equipment | |||
Subtotal | $ 319 | 319 | |
Land improvements | Minimum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 6 years | ||
Land improvements | Maximum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 10 years | ||
Buildings | |||
Property, plant and equipment | |||
Subtotal | $ 1,446 | 1,446 | |
Buildings | Minimum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 25 years | ||
Buildings | Maximum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 39 years | ||
Building improvements | |||
Property, plant and equipment | |||
Subtotal | $ 3,422 | 3,396 | |
Building improvements | Minimum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 25 years | ||
Building improvements | Maximum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 39 years | ||
Cylinders | |||
Property, plant and equipment | |||
Subtotal | $ 13,300 | 13,315 | |
Cylinders | Minimum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 15 years | ||
Cylinders | Maximum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 30 years | ||
Equipment | |||
Property, plant and equipment | |||
Subtotal | $ 28,205 | 27,258 | |
Equipment | Minimum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 3 years | ||
Equipment | Maximum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 10 years | ||
Equipment under capital lease | |||
Property, plant and equipment | |||
Subtotal | $ 315 | 315 | |
Equipment under capital lease | Minimum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 5 years | ||
Equipment under capital lease | Maximum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 7 years | ||
Vehicles | |||
Property, plant and equipment | |||
Subtotal | $ 1,736 | 1,773 | |
Vehicles | Minimum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 3 years | ||
Vehicles | Maximum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 5 years | ||
Lab and computer equipment, software | |||
Property, plant and equipment | |||
Subtotal | $ 3,233 | 3,103 | |
Lab and computer equipment, software | Minimum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 2 years | ||
Lab and computer equipment, software | Maximum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 8 years | ||
Furniture & fixtures | |||
Property, plant and equipment | |||
Subtotal | $ 930 | 840 | |
Furniture & fixtures | Minimum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 5 years | ||
Furniture & fixtures | Maximum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 10 years | ||
Leasehold improvements | |||
Property, plant and equipment | |||
Subtotal | $ 852 | 852 | |
Leasehold improvements | Minimum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 3 years | ||
Leasehold improvements | Maximum | |||
Property, plant and equipment | |||
Property, plant and equipment, Estimated Lives | 5 years | ||
Construction-in-progress | |||
Property, plant and equipment | |||
Subtotal | $ 3,192 | $ 3,533 |
Leases - Maturity of lease paym
Leases - Maturity of lease payments (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Leases | |
2023 (remaining) | $ 1,597 |
2024 | 2,372 |
2025 | 1,994 |
2026 | 1,374 |
Thereafter | 1,929 |
Total undiscounted operating lease payments | 9,266 |
Less imputed interest | (1,684) |
Present value of operating lease liabilities | $ 7,582 |
Leases - Balance Sheet Classifi
Leases - Balance Sheet Classification and Other Information (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Balance Sheet Classification | ||
Current lease liabilities (recorded in Accrued expenses and other current liabilities) | $ 1,809 | |
Current lease liabilities (recorded in Accrued expenses and other current liabilities) [Extensible Enumeration] | Accrued expenses and other current liabilities | |
Long-term lease liabilities | $ 5,773 | $ 5,763 |
Total operating lease liabilities | $ 7,582 | |
Other Information | ||
Weighted-average remaining term for operating leases | 3 years 2 months 16 days | |
Weighted-average discount rate for operating leases | 8.22% |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Leases | ||
Maximum lease agreement terms | 11 years | |
Operating lease liabilities | $ 1.3 | |
Selling, general and administrative expenses | ||
Leases | ||
Operating lease expense | $ 1.3 | $ 1.3 |
Goodwill and intangible asset_2
Goodwill and intangible assets - Company's other intangible assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Goodwill and intangible assets | ||
Gross Carrying Amount | $ 32,997 | $ 32,997 |
Accumulated Amortization | 16,830 | 15,433 |
Net | 16,167 | 17,564 |
Covenant not to compete | ||
Goodwill and intangible assets | ||
Gross Carrying Amount | 870 | 870 |
Accumulated Amortization | 754 | 710 |
Net | $ 116 | 160 |
Covenant not to compete | Minimum | ||
Goodwill and intangible assets | ||
Amortization Period (in years) | 6 years | |
Covenant not to compete | Maximum | ||
Goodwill and intangible assets | ||
Amortization Period (in years) | 10 years | |
Customer relationships | ||
Goodwill and intangible assets | ||
Gross Carrying Amount | $ 31,560 | 31,560 |
Accumulated Amortization | 15,821 | 14,491 |
Net | $ 15,739 | 17,069 |
Customer relationships | Minimum | ||
Goodwill and intangible assets | ||
Amortization Period (in years) | 3 years | |
Customer relationships | Maximum | ||
Goodwill and intangible assets | ||
Amortization Period (in years) | 12 years | |
Above market leases | ||
Goodwill and intangible assets | ||
Amortization Period (in years) | 13 years | |
Gross Carrying Amount | $ 567 | 567 |
Accumulated Amortization | 255 | 232 |
Net | $ 312 | $ 335 |
Goodwill and intangible asset_3
Goodwill and intangible assets - Additional Information (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Goodwill and intangible assets | |||
Goodwill impairment loss | $ 0 | $ 0 | |
Goodwill | 47,803 | $ 47,803 | |
Amortization of intangible assets | $ 1,397 | $ 1,397 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ in Millions | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jan. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Jun. 11, 2020 | Jun. 07, 2018 | Sep. 17, 2014 | |
Share-Based Compensation | |||||||
Common stock reserved for issuance | 4,227,261 | ||||||
Stock option vesting period | 1 year | 1 year | |||||
Share-based compensation arrangement by share based payment award percentage of fair market person holding more then 10% voting stock | 110% | ||||||
Intrinsic value of options outstanding | $ 18.7 | $ 20.6 | |||||
Intrinsic value of options unvested | 0 | $ 1.1 | |||||
Intrinsic value of options exercised | $ 0.4 | $ 1.8 | |||||
Stock Option Plan | |||||||
Share-Based Compensation | |||||||
Stock option vesting period | 2 years | ||||||
Stock option vesting, percentage | 50% | 50% | |||||
Option to purchase granted | 567,654 | 381,181 | |||||
Options vested | 334,005 | 40,588 | |||||
Minimum | Stock Option Plan | |||||||
Share-Based Compensation | |||||||
Contractual term | 3 years | ||||||
Maximum | Stock Option Plan | |||||||
Share-Based Compensation | |||||||
Contractual term | 10 years | ||||||
2014 Stock Incentive Plan | |||||||
Share-Based Compensation | |||||||
Common stock reserved for issuance | 3,000,000 | ||||||
2018 Stock Incentive Plan | |||||||
Share-Based Compensation | |||||||
Common stock reserved for issuance | 4,000,000 | ||||||
2020 Stock Incentive Plan | |||||||
Share-Based Compensation | |||||||
Common stock reserved for issuance | 3,000,000 | ||||||
Stock Option Plan | |||||||
Share-Based Compensation | |||||||
Options granted | 585,054 | 381,181 | |||||
Share-based awards at the granted | |||||||
Share-Based Compensation | |||||||
Options granted | 585,054 | 354,838 | |||||
Stock Appreciation Rights (SARs) | |||||||
Share-Based Compensation | |||||||
Stock option vesting period | 6 months | ||||||
Option to purchase granted | 17,400 | ||||||
Selling, general and administrative expenses | |||||||
Share-Based Compensation | |||||||
Share based compensation expense | $ 1.8 | $ 0.6 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of the activity for stock options issued under the Company's Plans (Details) - Stock Option Plan - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Shares | ||
Outstanding at beginning of period | 2,390,150 | 2,604,023 |
-Cancelled | (1,450) | (11,781) |
-Exercised | (54,751) | (583,273) |
-Granted | 585,054 | 381,181 |
Outstanding at end of period | 2,919,003 | 2,390,150 |
Weighted Average Exercise Price | ||
Outstanding at beginning of period | $ 1.51 | $ 1.03 |
-Cancelled | 10.28 | 3.75 |
-Exercised | 1.57 | 1.15 |
-Granted | 10 | 4.33 |
Outstanding at end of period | $ 3.20 | $ 1.51 |
Share-Based Compensation - Weig
Share-Based Compensation - Weighted average contractual life in years and the weighted average exercise price (Details) | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Number of Options | |
Options outstanding and vested | shares | 2,667,043 |
Weighted Average Remaining Contractual Life | |
Options outstanding and vested | 4 years 7 months 17 days |
Weighted Average Exercise Price | |
Options outstanding and vested | $ / shares | $ 2.56 |
Short-term and Long-term debt_2
Short-term and Long-term debt (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Short-term debt: | ||
- Term loan facility - current | $ 4,250 | $ 4,250 |
Subtotal | 4,250 | 4,250 |
Long-term debt: | ||
- Term loan facility- net of current portion of long-term debt | 13,238 | 27,563 |
- FILO term loan | 15,000 | 15,000 |
- Less: deferred financing costs on term loan | (3,153) | (3,578) |
Subtotal | 25,085 | 38,985 |
Total short-term & long-term debt | $ 29,335 | $ 43,235 |
Short-term and Long-term debt -
Short-term and Long-term debt - Maturities of long-term debt and capital lease obligations (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Short-term and long-term debt | |
-2024 | $ 4,250 |
-2025 | 4,250 |
-2026 | 4,250 |
-2027 | 19,738 |
Total | $ 32,488 |
Short-term and long-term debt_3
Short-term and long-term debt - Additional Information (Details) | 3 Months Ended | 6 Months Ended | |
Mar. 02, 2022 USD ($) | Mar. 31, 2022 USD ($) | Jun. 30, 2023 USD ($) | |
Short-term and long-term debt | |||
Maximum borrowing capacity | $ 90,000,000 | ||
Debt instrument, basis spread on variable rate | 2% | ||
FCCR | |||
Short-term and long-term debt | |||
Payment of debt, cash flow amount | $ 15,000,000 | ||
Federal Funds | |||
Short-term and long-term debt | |||
Debt instrument, basis spread on variable rate | 0.50% | ||
SOFR | |||
Short-term and long-term debt | |||
Debt instrument, basis spread on variable rate | 1% | ||
Revolving credit facility Amendment | |||
Short-term and long-term debt | |||
Debt instrument, basis spread on variable rate | 1% | ||
Additional interest percentage | 0.50% | ||
Revolving credit facility Amendment | FILO Tranche | |||
Short-term and long-term debt | |||
Debt instrument, basis spread on variable rate | 1% | ||
Additional interest percentage | 0.50% | ||
Revolving credit facility Amendment | SOFR | |||
Short-term and long-term debt | |||
Additional interest percentage | 1% | ||
Revolving credit facility Amendment | SOFR | FILO Tranche | |||
Short-term and long-term debt | |||
Additional interest percentage | 1% | ||
Revolving credit facility Amendment | SOFR | SOFR FILO Tranche | |||
Short-term and long-term debt | |||
Additional interest percentage | 7.50% | ||
Revolving credit facility Amendment | Prime commercial lending rate of Wells Fargo | FILO Tranche | |||
Short-term and long-term debt | |||
Additional interest percentage | 6.50% | ||
Revolving Credit Facility | |||
Short-term and long-term debt | |||
Deferred financing costs | $ 200,000 | ||
2022 Term Loan Facility | |||
Short-term and long-term debt | |||
Principal payments on term loan, percentage | 5% | ||
Percentage of excess cash flow in which annual payments made | 50% | ||
Term Loan Facility | |||
Short-term and long-term debt | |||
Deferred financing costs | $ 1,300,000 | ||
Debt instrument loan amount | 85,000,000 | ||
Payment of term loan deferred financing costs | $ 4,300,000 | ||
Prepayment premium percentage year one | 3% | ||
Prepayment premium percentage year two | 2% | ||
Prepayment premium percentage year three | 1% | ||
Prepayment premium percentage year four and thereafter | 0% | ||
Payment of debt, cash flow amount | $ 16,000,000 | ||
Principal balance of debt | 63,900,000 | ||
Lender fees and expenses on debt | $ 3,300,000 | ||
Credit facility, interest expense | $ 4,600,000 | ||
Minimum | FCCR | |||
Short-term and long-term debt | |||
Fixed charges coverage ratio | 1.10 | ||
Minimum | SOFR plus Applicable leverage ratio | |||
Short-term and long-term debt | |||
Additional interest percentage | 7% | ||
Minimum | Applicable Leverage Ratio | |||
Short-term and long-term debt | |||
Additional interest percentage | 6% | ||
Minimum | Revolving credit facility Amendment | SOFR | |||
Short-term and long-term debt | |||
Additional interest percentage | 2.36% | ||
Minimum | Revolving credit facility Amendment | Prime commercial lending rate of Wells Fargo | |||
Short-term and long-term debt | |||
Additional interest percentage | 1.25% | ||
Maximum | FCCR | |||
Short-term and long-term debt | |||
Fixed charges coverage ratio | 3.13 | ||
Maximum | SOFR plus Applicable leverage ratio | |||
Short-term and long-term debt | |||
Additional interest percentage | 8% | ||
Maximum | Applicable Leverage Ratio | |||
Short-term and long-term debt | |||
Additional interest percentage | 7% | ||
Maximum | Revolving credit facility Amendment | SOFR | |||
Short-term and long-term debt | |||
Additional interest percentage | 2.86% | ||
Maximum | Revolving credit facility Amendment | Prime commercial lending rate of Wells Fargo | |||
Short-term and long-term debt | |||
Additional interest percentage | 1.75% | ||
Term Loan | Minimum | FCCR | |||
Short-term and long-term debt | |||
Debt instrument, leverage ratio | 0.32 | ||
Term Loan | Maximum | FCCR | |||
Short-term and long-term debt | |||
Debt instrument, leverage ratio | 4 | ||
Wells Fargo | |||
Short-term and long-term debt | |||
Deferred financing costs | $ 900,000 | ||
Line of credit facility term | 5 years | ||
Amount outstanding, letter of credit | $ 900,000 | ||
Wells Fargo | FILO Tranche | |||
Short-term and long-term debt | |||
Amount borrowed | 15,000,000 | ||
Wells Fargo | FCCR | |||
Short-term and long-term debt | |||
Minimum aggregate undrawn loan availability | $ 11,250,000 | ||
Period for FCCR covenant | 12 months | ||
Wells Fargo | Revolving credit facility Amendment | |||
Short-term and long-term debt | |||
Maximum borrowing capacity | $ 75,000,000 | ||
Wells Fargo | Swing line loan | |||
Short-term and long-term debt | |||
Maximum borrowing capacity | 9,000,000 | ||
Wells Fargo | Letter of credit | |||
Short-term and long-term debt | |||
Maximum borrowing capacity | $ 2,000,000 | ||
Wells Fargo | Revolving Credit Facility | FCCR | |||
Short-term and long-term debt | |||
Period for FCCR covenant | 2 months | ||
Wells Fargo | Minimum | |||
Short-term and long-term debt | |||
Minimum liquidity requirement | $ 5,000,000 | ||
Minimum amount to be derived from availability | $ 3,000,000 | ||
Wells Fargo | Minimum | FCCR | |||
Short-term and long-term debt | |||
Fixed charges coverage ratio | 1 | ||
Wells Fargo | Minimum | Revolving credit facility Amendment | |||
Short-term and long-term debt | |||
Additional interest percentage | 0.35% | ||
Wells Fargo | Maximum | Revolving credit facility Amendment | |||
Short-term and long-term debt | |||
Additional interest percentage | 0.75% | ||
Wells Fargo | Maximum | Revolving Credit Facility | |||
Short-term and long-term debt | |||
Amount borrowed | $ 75,000,000 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 19,189 | $ 39,810 | $ 34,720 | $ 69,365 |
Insider Trading Arrangements
Insider Trading Arrangements | 6 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |