Hudson Technologies, Inc. (NASDAQ: HDSN; “Hudson” or the “Company”) announced that it has entered into a joint venture agreement with Europe-based Safety Hi-Tech S.r.l. (“SHT”) and the owners of the Italian engineering firm Banini-Binotti Associates (“BB”), for the development of reclamation, remediation and energy optimization services throughout most of Europe, the Middle East and North Africa. The European refrigerant aftermarket alone is estimated at over $700 million or approximately 70% of the U.S. refrigerant aftermarket. Additionally, due to the strict regulatory environment in Europe there is strong demand for the energy optimization and emissions reducing services Hudson provides.
The joint venture will create a new Italy-based company known as Hudson Technologies Europe S.r.l. Hudson and SHT will each own 40% of the new company and BB will own 20%. Using equipment and technology supplied and licensed by Hudson, the new company will market Hudson’s full suite of products and services, with an emphasis on Hudson’s energy optimization services. Hudson Technologies Europe will also provide reclamation support to SHT for the recycling and resale into the refrigeration market of refrigerants which are not only used in A/C systems but also used in most other fire suppression systems, including SHT’s. The parties have already made significant progress towards launching this joint venture, including the construction of equipment, facility layout and sourcing of refrigerants.
Hudson’s participation in this joint venture will further Hudson’s longer term growth strategy by:
- Positioning Hudson to meet increasing European market demand for energy optimization solutions that is being driven by high energy costs and a stringent regulatory environment
- Expanding Hudson’s opportunities to grow its reclamation business by taking advantage of Europe’s accelerated refrigerant phase out schedule; Virgin production of R-22 is currently 100% phased out in Europe and existing R-22 operating systems can only be serviced with reclaimed or recycled refrigerant that is presently selling at more than 3 times the price of R-22 in the U.S.
- Capitalizing on a very fragmented and under developed EU reclamation market which has few facilities able to meet Hudson’s purity and performance standards
- Providing immediate access to an established customer base and a well-developed infrastructure for the marketing of Hudson products and services in Europe, the Middle East and North Africa
The European Union (EU) is approximately five years ahead of the US in (i) the phase out of hydrochlorofluorocarbons (HCFCs), including R-22, (ii) carbon emission standards for greenhouse gases (“GHGs”), and (iii) efforts to increase energy efficiency. In the US, Hudson has been advancing in each of those areas ahead of government regulations and mandates, and in some instances ahead of market acceptance. Europe, however, has already created regulations and market incentives that Hudson believes support the offerings that the Company currently provides in the US. Consequently, Europe represents a promising and significant opportunity for Hudson, through the joint venture, to market and provide its services to industrial and commercial facilities.