Hudson Technologies Reports Record Revenues of $140.4 Million for Full Year 2017; Full Year EPS of $0.26 Per Diluted Share; Non-GAAP Adjusted Diluted EPS of $0.47

PEARL RIVER, N.Y.–(BUSINESS WIRE)–Hudson Technologies, Inc. (NASDAQ: HDSN) announced results for the
fourth quarter and year ended December 31, 2017.

Consolidated Results

For the year ended December 31, 2017 Hudson achieved record revenues of
$140.4 million, a 33% increase compared to $105.5 million in the
comparable 2016 period. The increase is primarily related to a higher
selling price of certain refrigerants, higher volumes of certain
refrigerants sold and the inclusion of $14.8 million of fourth quarter
revenue from ASPEN Refrigerants, Inc. (formerly Airgas Refrigerants,
Inc.) (“ARI”), which was acquired on October 10, 2017. Gross margin was
27% for full year 2017 compared to 29% for 2016. Net income for 2017 was
$11.2 million, or $0.27 per basic and $0.26 per diluted share, compared
to $10.6 million or $0.31 per basic and $0.30 per diluted share in 2016.

Non-GAAP adjusted net income for the year ended December 31, 2017 was
$20.2 million, or $0.47 per diluted share, compared to non-GAAP adjusted
net income of $11.4 million, or $0.32 per diluted share for 2016.
Adjusted EBITDA was $27.2 million for the year ended December 31, 2017,
as compared to adjusted EBITDA of $21.3 million for full year 2016.

The Company reported revenues of $24.6 million for the fourth quarter
ended December 31, 2017, an increase of 215% compared to $7.8 million in
the comparable 2016 period. The fourth quarter included nearly a full
quarter of consolidated revenues of $14.8 million from the Company’s
acquisition of ARI. Gross margin in the fourth quarter of 2017 was 12%,
compared to gross margin of 13% during the fourth quarter of 2016. Net
loss for the quarter was $5.2 million, or ($0.12) per basic and diluted
share, compared to a net loss of $1.9 million, or ($0.05) per basic and
diluted share, in the fourth quarter of 2016.

Non-GAAP adjusted net loss for the fourth quarter of 2017 was $2.3
million, or ($0.06) per share, compared to a non-GAAP adjusted net loss
of $1.8 million, or ($0.05) per share for the fourth quarter of 2016.
Adjusted EBITDA in the fourth quarter of 2017 was negative $1.7 million,
as compared to an Adjusted EBITDA of negative $2.2 million in the same
period of 2016.

Reconciliations of net income (loss) to non-GAAP adjusted net income
(loss), diluted net income (loss) per share to non-GAAP adjusted diluted
earnings (loss) per share, and net income (loss) to non-GAAP adjusted
EBITDA, respectively, are provided in the tables immediately following
the consolidated financial statements. Additional information about the
Company’s non-GAAP financial measures can be found under the caption
“Use of Non-GAAP Measures” below.

Pro Forma Results

The following table provides unaudited summary pro forma total revenues
and results of operations for the twelve months ended December 31, 2017
and 2016 as if ARI had been acquired on January 1, 2016. The unaudited
summary pro forma information reflects certain adjustments related to
the acquisition, such as the amortization of the step-up in basis in
inventory, amortization expense on intangible assets arising from the
acquisition, and interest on the new loans. The pro forma results do not
include any anticipated cost synergies or other effects of any planned
integration. Accordingly, such pro forma amounts are not necessarily
indicative of the results that actually would have occurred had the
acquisition been completed at the beginning of 2016, nor are they
indicative of the future operating results of the combined companies.

The unaudited pro forma earnings for the twelve months ended December
31, 2017 were also adjusted to exclude $6.3 million of
acquisition-related expenses incurred in 2017.

Kevin J. Zugibe, Chairman and Chief Executive Officer of Hudson
Technologies commented, “2017 was a transformative year for Hudson. With
the acquisition of ARI, we have more than doubled the size of our
business. The combined Company is the market leader in the refrigerant
and reclamation industry with a larger, complementary portfolio of
product offerings, increased geographic presence, an enhanced customer
base and a broader and more effective sales and distribution network.
Our increased size and scale will allow us to better serve our customers
as our industry continues to evolve.

“Our fourth quarter is historically our weakest due to seasonal declines
in demand for refrigerant. We had a solid and profitable nine-month
selling season and are increasingly well positioned for the market
opportunity before us. The phase out in production of virgin R-22
refrigerant continues with only 9 million pounds allocated for
production in 2018, and with 2019 representing the last year for
production of R-22. HFCs, the next generation gas, are also targeted for
a future phase down. We look forward to leveraging our expanded
capabilities, industry expertise and proprietary technology to
capitalize on this market opportunity.”

Summary and Outlook

Mr. Zugibe continued, “During our third quarter 2017 call last November,
we indicated that consolidated Hudson and ASPEN results for the year
ending December 31, 2018 are expected to be similar to pro forma 2016
results. We also noted that we were expecting approximately $250 million
in revenues for the 2018 period, which is slightly higher than the 2016
proforma results due to the inclusion of the DLA contract in the 2018
period. Moreover, we expected that GAAP gross margin would adjust down
to approximately 25% from the pro forma 2016 margins due to the pricing
of R-22. Consequently, based on the pro forma data and adjusted for the
items noted, we believe the resulting GAAP EPS for 2018 should be in the
range of $0.27 to $0.30. Adding back, and tax effecting, an estimated $7
million of non-cash amortization from the step-up in inventory basis,
which is similar to the full year 2017 amortization, the Non-GAAP
Adjusted EPS should be in the range of $0.38 to $0.42.

“As we look at the start of the 2018 selling season, the first quarter
of 2018 buying pattern for R-22, and for nearly all HFCs, is on more of
a just-in-time basis, as opposed to typical pre-season inventory
stocking in anticipation of the impending cooling season. We have seen
this just-in-time buying pattern before, such as in the first quarter of
2009, 2010, and 2014. As is currently the case with 2018, this
just-in-time pattern typically follows a year of declines in refrigerant
pricing during the cooling season and thereby large distributors and
stocking locations choose to delay their purchases until the season
actually begins to avoid the impact of potential price erosion. Hence,
we expect first quarter 2018 consolidated revenue to be in the range of
$44 million to $48 million. Additionally, we expect Non-GAAP Adjusted
EPS for the first quarter of 2018 of approximately $0.01 to $0.02.
Importantly, we have always viewed the cooling season as a nine month
season, and we expect the delayed purchases to shift volume into the
second and third quarter. Therefore, our revenue expectations for the
full year remain unchanged.”

Conference Call Information

The Company will host a conference call and webcast to discuss the
fourth quarter results today, March 7, 2018 at 5:00 P.M. Eastern Time.

To access the live webcast, log onto the Hudson Technologies website at www.hudsontech.com,
and click on “Investor Relations.”

To participate in the call by phone, dial (877) 407-9205 approximately
five minutes prior to the scheduled start time. International callers
please dial (201) 689-8054.

A replay of the teleconference will be available until April 7, 2018 and
may be accessed by dialing (877) 481-4010. International callers may
dial (919) 882-2331. Callers should use conference ID: 25326.

About Hudson Technologies

Hudson Technologies, Inc. is a leading provider of innovative and
sustainable solutions for optimizing performance and enhancing
reliability of commercial and industrial chiller plants and
refrigeration systems. Hudson's proprietary RefrigerantSide®
Services increase operating efficiency, provide energy and cost savings,
reduce greenhouse gas emissions and the plant’s carbon footprint while
enhancing system life and reliability of operations at the same time.
RefrigerantSide® Services can be performed at a customer's
site as an integral part of an effective scheduled maintenance program
or in response to emergencies. Hudson also offers SMARTenergy OPS®,
which is a cloud-based Managed Software as a Service for continuous
monitoring, Fault Detection and Diagnostics and real-time optimization
of chilled water plants. In addition, the Company sells refrigerants and
provides traditional reclamation services for commercial and industrial
air conditioning and refrigeration uses. For further information on
Hudson, please visit the Company's web site at www.hudsontech.com.

Safe Harbor Statement under the Private Securities Litigation Reform
Act of 1995

Statements contained herein which are not historical facts constitute
forward-looking statements. These include statements regarding
management’s intentions, plans, beliefs, expectations or forecasts for
the future including, without limitation, Hudson’s expectations with
respect to the benefits, costs and other anticipated financial impacts
of the ARI transaction; future financial and operating results of the
Company; and the Company’s plans, objectives, expectations and
intentions with respect to future operations and services. Such
forward-looking statements involve a number of known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, but
are not limited to, changes in the laws and regulations affecting the
industry, changes in the demand and price for refrigerants (including
unfavorable market conditions adversely affecting the demand for, and
the price of, refrigerants), the Company's ability to source
refrigerants, regulatory and economic factors, seasonality, competition,
litigation, the nature of supplier or customer arrangements that become
available to the Company in the future, adverse weather conditions,
possible technological obsolescence of existing products and services,
possible reduction in the carrying value of long-lived assets, estimates
of the useful life of its assets, potential environmental liability,
customer concentration, the ability to obtain financing, any delays or
interruptions in bringing products and services to market, the timely
availability of any requisite permits and authorizations from
governmental entities and third parties as well as factors relating to
doing business outside the United States, including changes in the laws,
regulations, policies, and political, financial and economic conditions,
including inflation, interest and currency exchange rates, of countries
in which the Company may seek to conduct business, the Company’s ability
to successfully integrate ARI’s operations and any assets it acquires
from other third parties into its operations, and other risks detailed
in the Company's 10-K for the year ended December 31, 2016 and other
subsequent filings with the Securities and Exchange Commission. Examples
of such risks and uncertainties specific to the ARI transaction include,
but are not limited to, the possibility that the expected benefits will
not be realized, or will not be realized within the expected time
period. The words "believe", "expect", "anticipate", "may", "plan",
"should" and similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date the
statement was made.

Use of Non-GAAP Measures

The Company has presented the following non-GAAP financial measures in
this press release: EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss)
and Adjusted Earnings (Loss) Per Share (Adjusted EPS). The Company
defines EBITDA as the net income (loss) as reported under GAAP, plus
income tax expense (benefit), interest expense and depreciation and
amortization expense. The Company defines Adjusted EBITDA as EBITDA plus
the amortization of the inventory step-up in basis arising from
inventory purchased in the ARI acquisition, non-cash stock compensation
expense, and non-recurring transaction fees and integration costs
related to the ARI acquisition. The Company defines Adjusted Net Income
(Loss) as the net income (loss) as reported under GAAP plus income tax
expense (benefit), the amortization of the inventory step-up in basis
arising from inventory purchased in the ARI acquisition, amortization
expense, non-cash stock compensation expense, and non-recurring
transaction fees and integration costs related to the ARI acquisition
and adjusted for effective tax rates. The Company defines Adjusted EPS
as Adjusted Net Income (Loss) per share.

We present these non-GAAP measures because we believe these measures are
useful indicators of our operating performance, particularly in light of
the impact of the recent ARI acquisition. Our management believes that
detail as to the impact of the specified acquisition-related matters and
other matters is useful in understanding the overall change in the
consolidated results of operations for Hudson Technologies from one
reporting period to another. Our management uses these non-GAAP measures
principally as a measure of our operating performance and believes that
these measures are useful to investors because they are frequently used
by analysts, investors and other interested parties to evaluate the
operating performance of companies in our industry. We also believe that
these measures will be useful to our management and investors during
2018 as the impact of the ARI acquisition continues to be reflected in
the Company’s financial results.

Appendix – Non GAAP Reconciliations (unaudited)

(a) Consists of transaction fees and integration costs related to the
acquisition of ARI.

Contacts

Investor Relations:
Institutional Marketing Services (IMS)
John
Nesbett/Jennifer Belodeau, 203-972-9200
[email protected]
or
Hudson
Technologies, Inc.
Brian F. Coleman, 845-735-6000
President
& COO
[email protected]