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Acquisition

12 Months Ended

Dec. 31, 2024

Acquisition

Note 14 – Acquisition

On June 6, 2024, the Company’s subsidiary Hudson Technologies Company completed the acquisition of substantially all the business assets of USA United Suppliers of America, Inc. (d/b/a USA Refrigerants) (“USA Refrigerants”) and B&B Jobber Services, Inc. (collectively, the “USA Refrigerants Acquisition”). The consideration for the USA Refrigerants Acquisition was approximately $20.7 million in cash, paid at the closing, and provides for a further contingent payment of up to $2.0 million payable, to the extent earned, approximately 18 months from the closing date. The Company estimated the fair value of this contingent earn-out liability to be $1.6 million as of June 6, 2024 and December 31, 2024 , which is recorded in other short-term liabilities on the consolidated balance sheet.

The following table summarizes the final fair values of the assets acquired and liabilities assumed from the USA Refrigerants Acquisition:

Consideration


Cash		$	20,670
Contingent consideration			1,600
Total consideration transferred		$	22,270

Identifiable assets acquired


		Amortization life		Fair Value
		(in months)		(in thousands)
Inventories				$	5,073
Covenant not to compete		60			60
Customer relationships		24			1,120
Tradename		60			1,540
Total identified assets					7,793
Goodwill					14,477
Total net assets acquired				$	22,270

The fair values of the acquired intangibles were determined using discounted cash flow models using a discount factor based on an estimated risk-adjusted weighted average cost of capital. The customer relationships were valued using the multi-period excess-earnings method, a form of the income approach.

The acquisition resulted in the recognition of $14.5 million of goodwill, which will be deductible for tax purposes. Goodwill largely consists of expected growth in revenue from new customer acquisitions over time.

The Company reflected revenue and net income in its consolidated statement of income related to the USA Refrigerants Acquisition for the period from the acquisition date through December 31, 2024, as follows:


Twelve months ended December 31,		2024
(in thousands)
Revenues		$	6,060
Net income		$	1,593

The following table provides unaudited pro forma total revenues and results of operations for the year ended December 31, 2024, 2023 and 2022 as if USA Refrigerants had been acquired on January 1, 2022. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as a step-up in basis in inventory, and amortization expense on intangible assets arising from the acquisition. 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 USA Refrigerants Acquisition been completed at the beginning of 2022, nor are they indicative of the future operating results of the combined companies (dollars in thousands):


		2024			2023			2022
(in thousands)
Revenue		$	246,395		$	299,150		$	351,787
Net Income			25,850			53,845			111,446

In relation to the USA Refrigerants Acquisition, the Company incurred $0.3 million of acquisition costs which are included in selling, general and administrative expenses within the consolidated statement of income for the year ended December 31, 2024.