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HUDSON TECHNOLOGIES INC /NY (HDSN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered resilient performance despite a slow start to the cooling season: revenue $72.8M, gross margin 31%, and diluted EPS $0.23; cash ended at $84.3M with no debt .
  • Results exceeded S&P Global consensus: revenue beat by ~$1.2M ($71.7M consensus*) and EPS beat by $0.06 ($0.17 consensus*)—driven by improved pricing (HFC-410A at ~$8/lb intra-quarter) and stable operations .
  • Management maintained FY 2025 gross margin target at “mid-20%,” pointing to slight upside depending on Q3 strength; Q4 expected to be seasonally soft .
  • Near-term catalysts: EPA’s release of 2024 inventory data (expected Sep/Oct), outcome of the DLA contract rebid, ongoing tariff dynamics, and ramping A2L aftermarket activity into 2026 .

What Went Well and What Went Wrong

What Went Well

  • Pricing stabilization and improvement: HFC-410A pricing reached ~$8/lb intra-quarter, driving a 31% gross margin versus 30% last year; management called this the first sequential pricing increase in two seasons .
  • Reclamation momentum: continued strength in reclamation with improved recovered refrigerant sourcing and marketplace presence, building on the USA Refrigerants acquisition .
  • Balance sheet strength and capital returns: ended Q2 with $84.3M cash and no debt; repurchased ~$2.7M of stock during Q2 and $4.5M YTD .

Quotes:

  • “We posted gross margin of 31%, primarily related to increased pricing of certain refrigerants” .
  • “We saw continued improvement in our ability to source recovered refrigerants” .
  • “Our capital allocation strategy remains committed to…opportunistic repurchase of our stock” .

What Went Wrong

  • Volume softness: cooler spring in the Northeast/Midwest delayed the seasonal demand ramp; revenues fell 3% YoY on lower volumes despite price offset .
  • SG&A creep: SG&A increased slightly to $9.3M vs. $9.0M YoY, mainly due to staffing .
  • Mixed trend backdrop: while Q2 pricing improved, management noted slight pullback early in Q3 and reiterated seasonal softness in Q4 .

Financial Results

MetricQ3 2024Q4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$61.94 $34.64 $55.34 $72.85
Diluted EPS ($USD)$0.17 $(0.06) $0.06 $0.23
Gross Margin %26% 17% 22% 31%
Operating Income ($USD Millions)$6.97 $(3.25) $3.08 $12.72
Net Income ($USD Millions)$7.81 $(2.57) $2.76 $10.17
MetricQ3 2024Q4 2024Q1 2025Q2 2025
Revenue Actual ($USD Millions)$61.94 $34.64 $55.34 $72.85
Revenue Consensus* ($USD Millions)$66.11*$37.96*$52.23*$71.66*
EPS Actual ($USD)$0.17 $(0.06) $0.06 $0.23
EPS Consensus* ($USD)$0.158*$(0.033)*$0.05*$0.17*

Consensus estimates marked with * are values retrieved from S&P Global.

Segment breakdown: Hudson reports as a single business without disclosed segment-level revenue this quarter .

KPIQ3 2024Q4 2024Q1 2025Q2 2025
Cash & Equivalents ($USD Millions)$56.49 $70.13 $81.05 $84.29
Inventories ($USD Millions)$103.52 $96.25 $78.30 $77.68
Trade Accounts Receivable ($USD Millions)$28.55 $13.63 $27.45 $35.88
SG&A ($USD Millions)$8.06 $8.00 $8.17 $9.27
Operating Cash Flow (period, $USD Millions)$71.10 (9M) $91.81 (FY) $14.16 (Q1) $20.57 (6M)
Share Repurchases ($USD Millions)$2.64 (Q3) $5.50 (Q4) $1.83 (Q1) $2.70 (Q2)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Margin %FY 2025“Mid-20% expected gross margin” “Maintaining mid-20% target; potentially slightly higher depending on Q3 strength” Maintained (slight upside bias)
DLA Contract Run-RateFY 2025N/AQ2 orders in line with expected annual order run-rate; awaiting new award later in 2025 Operational update

No explicit revenue, OpEx, OI&E, tax rate, or dividend guidance provided in Q2 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q2 2025)Trend
Pricing (HFC-410A)2024 saw pricing declines up to ~45% YoY; pressured margins . Q1 2025 sequential pricing declined slightly vs Q4 .Sequential pricing improved; HFC-410A reached ~$8/lb intra-quarter; slight moderation early Q3 .Improving vs early year; modest pullback in Q3.
Tariffs/MacroNot emphasized in Q4/Q1 disclosures .Tariffs on refrigerants and steel contributed to pricing volatility; reclaimed (U.S.-sourced) benefits from tariff-free economics .Volatile; supportive to reclaimed margin mix.
Reclamation & RecoveryReclaim activity +18% in FY 2024; USA Refrigerants acquisition bolstered capabilities . Q1: continued strength in recovery .Continued strength; enhanced recovery capabilities; improving access to recovered gas .Strengthening structurally.
EPA/AIM ActEPA finalized reclaim mandates beginning 2029, seen as positive .New EPA leadership evaluating certain regs; Hudson engaged with EPA/Congress; reclamation critical to lifecycle economics .Monitoring; medium-term supportive policy backdrop.
DLA ContractLower DLA activity YoY; no new award yet .Q2 orders in line; expect award results later in 2025; no small-business set-aside; 5–10 bidders .Pending decision; execution solid.
A2L Aftermarket (454B/R-32)Not discussed Q4/Q1 .Hudson participates in aftermarket A2L; expects potential doubling of volume next year as legacy HFC installs wind down .Emerging growth vector into 2026.

Management Commentary

  • CEO framing: “We delivered a solid second quarter…we recorded a slight decrease in revenues…we posted gross margin of 31%…continued improvement in our ability to source recovered refrigerants” .
  • Strategic positioning: “The current phase-down of HFCs represents a significant long-term growth opportunity for reclaimed HFCs…as the supply of newly manufactured HFCs becomes increasingly limited” .
  • Capital allocation: “Unlevered balance sheet…$84.3 million in cash…pillars: organic growth, additive acquisitions, opportunistic repurchase of our stock” .
  • Pricing and margin outlook: “Maintaining our full year 2025 gross margin target of mid-twenty percent or potentially slightly higher depending on the strength of the third quarter” .
  • Education & recovery: Hudson actively trains contractors; reclaim adoption growing; outreach at industry events .

Q&A Highlights

  • A2L market: Hudson sells aftermarket A2Ls (454B/R-32); current contribution small but could “double” next year as legacy HFC unit sellout completes .
  • HFC pricing: HFC-410A peaked around ~$8/lb in Q2 with slight retraction thereafter; stabilization around that range .
  • Reclamation disclosure: Mid-year reclamation volumes not broken out; USA Refrigerants now fully integrated; reclamation business activity encouraging into Q3 .
  • Inventory/allowances: EPA expected to release 2024 inventory data in Sep/Oct; management sees stabilizing balance between allowances and demand .
  • Tariffs: Tariffs on imported refrigerants and steel influenced pricing; reclaimed (U.S.-sourced) enjoys better economics and incremental unit profit as prices rise .
  • DLA contract: No small-business set-aside; 5–10 bidders; Hudson’s delivery metrics strong; timing of award uncertain .

Estimates Context

  • Q2 2025: EPS $0.23 vs $0.17 consensus*—beat; revenue $72.85M vs $71.66M consensus*—beat [GetEstimates].
  • Q1 2025: EPS $0.06 vs $0.05*—beat; revenue $55.34M vs $52.23M*—beat .
  • Q4 2024: EPS $(0.06) vs $(0.033)—miss; revenue $34.64M vs $37.96M—miss .
  • Q3 2024: EPS $0.17 vs $0.158*—beat; revenue $61.94M vs $66.11M*—miss .

Consensus estimates marked with * are values retrieved from S&P Global.

Key Takeaways for Investors

  • Pricing tailwind arrived: sequential HFC-410A price improvement supported 31% GM; maintain overweight exposure into Q3 seasonality while acknowledging slight Q3 moderation and typical Q4 softness .
  • Reclaimed leverage: tariff volatility favors U.S.-sourced reclaimed gas; higher market prices drop through at greater unit profit—constructive for margins and FCF .
  • Structural growth: A2L aftermarket penetration should expand materially in 2026, offering a new revenue stream while HFC installed base supports long reclamation tail .
  • Balance sheet optionality: $84.3M cash, no debt enables continued buybacks, organic investment, and bolt-ons amid AIM Act transition—supportive for capital returns and growth .
  • Watch catalysts: EPA inventory data in Sep/Oct (impacts pricing sentiment), DLA contract award (run-rate validation), and tariff actions (margin mix effects) .
  • Estimate revisions: Street likely to raise near-term margin assumptions modestly post-Q2 beats; maintain mid-20% GM for FY with upside if Q3 pricing holds [GetEstimates].
  • Execution focus: SG&A drift reflects staffing; monitor operating discipline and working capital (AR build with seasonal demand) as Q3 volumes peak .