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HUDSON TECHNOLOGIES INC /NY (HDSN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered revenue of $55.3M and diluted EPS of $0.06, modestly above Wall Street consensus, with gross margin at 22% amid continued lower refrigerant pricing; management expects full-year GM in the “mid-20s” percent as the selling season progresses .
  • Pricing for certain HFCs was roughly 40% lower versus Q1 2024; sequential pricing declined slightly vs Q4 2024, though management has observed pricing moving above $6/lb post-quarter, with tariffs and supply chain disruptions being passed through .
  • Balance sheet remains strong and unlevered with $81.0M cash and no debt; operating cash flow was $14.2M in Q1; Hudson continued buybacks ($4.5M YTD through the call) under its 2025 authorization .
  • The AIM Act’s HFC phase down and emerging state reclaim mandates underpin a multi-year reclamation growth opportunity; reclaim volumes rose in Q1, aided by 2024’s USA Refrigerants acquisition .

What Went Well and What Went Wrong

What Went Well

  • Strengthened balance sheet: Ended Q1 with $81.0M in cash and no debt; continued repurchases with $4.5M YTD, supporting capital allocation flexibility .
  • Reclamation momentum: Increased reclaim volumes in Q1, supported by the USA Refrigerants acquisition, improving recovery network reach and supply of reclaimed refrigerant .
  • Operational execution and demand preparedness: Management reiterated focus on ensuring refrigerant availability into peak season and promoting recovery/reclamation as industry transitions to lower-GWP refrigerants; “We are pleased with the start to 2025… ensuring that our customers have the refrigerants they need” .

What Went Wrong

  • Pricing-driven margin compression: Gross margin fell to 22% vs 33% in Q1 2024 as lower market prices offset slight volume gains, and sequential pricing declined slightly vs Q4 2024 .
  • YoY revenue and earnings pressure: Revenue decreased 15% YoY to $55.3M; operating income fell to $3.1M (from $12.8M) and net income to $2.8M (from $9.6M), reflecting the pricing environment .
  • Cost/tariff headwinds and supply constraints: Tariff volatility (China, India) and A2L cylinder/valve supply issues elevated landed costs and disrupted supply, requiring pass-through to customers and creating uncertainty early in the season .

Financial Results

Core P&L vs Prior Year and Prior Quarter

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$65.250 $34.643 $55.343
Gross Margin %33% 17% 22%
SG&A ($USD Millions)$7.947 $7.998 $8.170
Operating Income ($USD Millions)$12.776 ($3.246) $3.075
Net Income ($USD Millions)$9.562 ($2.565) $2.758
Diluted EPS ($USD)$0.20 ($0.06) $0.06

Actual vs Wall Street Consensus (S&P Global)

MetricQ1 2025 EstimateQ1 2025 Actual
Revenue ($USD)$52,234,500*$55,343,000
Primary EPS ($USD)$0.05*$0.06
# of Estimates (Revenue)4*—
# of Estimates (EPS)4*—

Values retrieved from S&P Global.*

Highlights: Revenue and EPS both beat consensus. Bold implications: Revenue beat by ~$3.1M and EPS beat by $0.01, suggesting initial price stabilization and volume resilience into the selling season.*

Balance Sheet and Cash Flow KPIs

KPIQ4 2024Q1 2025
Cash and Equivalents ($USD Thousands)$70,134 $81,048
Inventories ($USD Thousands)$96,247 $78,299
Trade A/R ($USD Thousands)$13,629 $27,452
Total Liabilities ($USD Thousands)$56,802 $61,063
Stockholders’ Equity ($USD Thousands)$245,850 $246,822
Cash from Operations ($USD Thousands)N/A$14,156

Note: DLA contract revenue cadence remains consistent with historical mid-$30M annualized run-rate per management .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Margin %FY 2025Mid-20s% (management expectation communicated entering 2025) Mid-20s%; management expects GM “closer to the mid-20s,” slight improvement from Q1’s 22% as selling season progresses Maintained
DLA Revenue Run-RateFY 2025Mid-$35M annualized (consistent cadence) Mid-$35M annualized Maintained
Share Repurchase ProgramCalendar 2025Up to $10M under $20M multi-year authorization (announced Oct 2024) $4.5M repurchased YTD through the Q1 call; $5.5M remaining from 2025’s $10M capacity In-progress (execution)

No explicit revenue, OpEx, OI&E, or tax rate numerical guidance was provided for Q2/Q3; management emphasized pass-through of tariffs and pricing stabilization dynamics .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
HFC PricingPersistent pricing pressure in cooling season 2024; adjusted full-year 2024 expectations; GM ~28% .Q1 pricing ~40% lower YoY; slight sequential decline vs Q4; observed post-quarter increase >$6/lb .Stabilizing with early signs of recovery post-quarter.
Tariffs/MacroNoted general macro headwinds in 2024 .Tariffs on steel/Chinese/Indian goods elevating costs; pass-through underway; volatility remains .Cost inflation and uncertainty; pass-through supports margins.
Reclamation Activity18% reclaim volume increase in 2024; USA Refrigerants acquisition bolstered capabilities .Q1 reclaim volumes up; double-digit growth off seasonal low base; ongoing education and recovery initiatives .Positive momentum; structural tailwind from AIM Act.
AIM Act/RegulatoryEPA finalized Refrigerant Management rule; reclaim mandates begin 2029 .Technology Transition Rule driving A2L (454B/32) adoption; EPA staff continuity; industry engagement .Transition accelerating; long-term demand for reclaimed HFCs.
Supply Chain/CylindersNot a central issue in prior PRs.A2L valve lead times and disposable cylinder steel supply constraints; elevated costs/longer lead times .Near-term friction; manageable via pass-through.
DLA ContractLower activity in Q3 2024; full year 2024 decline vs 2023 surge .Q1 orders consistent with historical run-rate; reaffirmed mid-$35M 2025 cadence .Normalizing cadence.
Inventory LevelsElevated upstream inventories pressured 2024 pricing .Inventories down to $78.3M; management monitoring upstream “stockpile” levels as season warms .De-stocking supports pricing normalization.

Management Commentary

  • Strategic posture: “We are pleased with the start to 2025… ensuring that our customers have the refrigerants they need as the weather turns warmer” .
  • Reclamation thesis: “We believe the current phase down of HFC refrigerants under the AIM Act provides a substantial long-term opportunity for the continued growth of our reclamation business” .
  • Margin outlook: “We believe our 2025 gross margin will be closer to the mid-20s, improving slightly from our first quarter margin performance” .
  • Capital allocation: “We remain focused on… organic growth, pursuing acquisition opportunities… and opportunistically repurchase our stock. To date in 2025 we have repurchased $4.5M” .
  • Pricing/supply: “Tariff costs are beginning to affect our supply side cost… industry has begun to pass these higher costs through… pricing increased to over $6 a pound since the close of the quarter” .

Q&A Highlights

  • Pricing drivers and durability: Stability and increases driven by supply chain disruptions and tariffs; permanence depends on upstream inventory normalization as weather warms .
  • Cylinder/valve constraints: A2L left-hand thread valves and disposable cylinder steel supply are bottlenecks; Hudson’s reusable fleet is an advantage, but A2L transition adds friction .
  • Reclamation growth: Q1 reclaim volumes up; double-digit growth off seasonal low base; education and contractor engagement are accelerating recovery practices .
  • Tariffs/Imports: Mexican production capacity limited; greater impact from Indian tariff volatility and elevated Chinese tariffs .
  • DLA cadence: Expect ~mid-$35M annualized in 2025; normal purchasing levels reaffirmed .
  • Buybacks: Proceeding opportunistically; ~$5.5M capacity remaining under 2025’s $10M authorization as of the call .

Estimates Context

  • Q1 2025 results vs consensus: Revenue $55.34M vs $52.23M estimate (Beat); EPS $0.06 vs $0.05 estimate (Beat). Number of estimates: 4 for both EPS and revenue.*
  • Implications: Estimate revisions likely to reflect early-season pricing stabilization, pass-through of tariff-related costs, and reclaim momentum; gross margin trajectory toward mid-20s could support modest upward EPS revisions into Q2/Q3 .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Early-season beat with signs of pricing stabilization post-quarter; watch upstream inventory normalization as a near-term catalyst for margins and pricing durability .
  • Margin outlook constructive: management expects GM to trend toward mid-20s as selling season progresses; pass-through of tariff-driven costs helps defend margin .
  • Structural reclaim tailwind: AIM Act phase down and emerging state mandates should sustain multi-year reclaimed HFC demand; Q1 reclaim volumes grew, aided by USA Refrigerants integration .
  • Strong balance sheet and FCF: $81.0M cash, no debt, $14.2M operating cash flow in Q1 provides optionality for organic investments, M&A, and buybacks .
  • DLA contract normalization: Reinforced ~mid-$35M run-rate supports baseline revenue stability across the year .
  • Watch A2L transition frictions: Cylinder/valve supply constraints may affect near-term costs/availability, but Hudson’s reusable fleet and distribution network are advantages .
  • Trading setup: Near-term narrative turns on pricing stability (> $6/lb) and inventory drawdown; a stronger Q2 could catalyze sentiment if margin improves toward mid-20s as guided .