Hudson Technologies, Inc. (NASDAQ: HDSN) is having an overwhelmingly strong start to the trading session this morning, and for good reason. The company announced financial restructuring news, exciting investors and sending the stock screaming for the top. Today, we’ll talk about:
- The financial restructuring;
- what we’re seeing from HDSN stock as a result; and
- what we’ll be watching for ahead.
HDSN Announces Financial Restructuring
As mentioned above, Hudson Technologies is having an incredibly strong start to the trading session this morning after announcing a financial update. In an SEC filing issued early this morning, the company said that Hudson Technologies Company, its indirect subsidiary and Hudson Holdings and Aspen Refrigerants entered into a Second Amendment to its Amended and Restated Revolving Credit and Security Agreement with PNC Bank.
In the filing, HDSN said that the Second Revolver Amendment will replace the existing fixed charge coverage ratio until September 30, 2019. However, the Amendment does come with an EBITDA covenant. To remain compliant with this agreement, the company must meet a minimum EBITDA as follows:
- Four Quarters Ending September 30, 2018 – EBITDA of $9.24 million.
- Four Quarters Ending December 31, 2018 – EBITDA of $9.428 million.
- Four Quarters Ending March 31, 2019 – EBITDA of $9.27 million.
- Four Quarters Ending June 30, 2019 – EBITDA of $14.195 million.
In the SEC filing, HDSN said that the minimum fixed charge coverage ratio of 1 to 1 shall recommence for the quarter ending September 30, 2019.
It’s also worth mentioning that the amendment increases the applicable interest rate margin to 3% for Eurodollar Rate Loans and 2% for Domestic Rate Loans through September 30, 2019. Following this date, applicable margins will be between 2.5% and 3% for Eurodollar Rate Loans and 1.5% and 2% for Domestic Rate Loans.
In a statement, Kevin Zugibe, CEO at HDSN, had the following to offer:
In the first nine months of 2018 we drove strong cash flow from operations of $35M and reduced our debt by $37M… These definitive amendments with our lenders provide amended covenants that give us the financial flexibility and liquidity to drive our operating performance and support our long-term corporate objectives as we look toward the 2019 selling season and beyond.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. In the case of Hudson Technologies, the news proved to be positive. After all, the Amended Revolver will keep the door open to key, neccessary funds. Furthermore, the minimum EBITDA agreement gives us an idea that the next earnings report is going to be a positive one. So, it’s not surprising to see that excited investors are pushing the stock for the top. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:52), HDSN is trading at $1.96 per share after a gain of $0.87 per share or 79.82% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the iWatch Markets team will continue to keep a close eye on HDSN. In particular, we’re interested in following the news surrounding the company’s use of this credit facility and financial reports considering the minimum EBITDA requirements. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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