Hudson Technologies (HDSN) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue declined 15% year-over-year to $55.3 million due to a 40% drop in refrigerant prices, despite modestly higher sales and reclaim volumes, with net income falling to $2.8 million ($0.06 per diluted share) from $9.6 million in Q1 2024.

• Gross margin compressed to 22% from 33% in Q1 2024, reflecting lower market prices despite increased reclaim activity.

• The USA Refrigerants acquisition in 2024 added $5.9 million in Q1 2025 revenue and $1.4 million net income, strengthening reclamation capabilities.

• Ended the quarter with $81 million in cash and no debt, maintaining a strong unlevered balance sheet and supporting $4.5 million in share repurchases year-to-date.

• Share repurchase program expanded to $20 million through 2025, with $1.8 million repurchased in Q1.

Financial highlights

• Revenue: $55.3 million, a 15% decrease year-over-year.

• Gross margin: 22% in Q1 2025 vs. 33% in Q1 2024.

• Operating income: $3.1 million, down from $12.8 million in Q1 2024.

• Net income: $2.8 million, $0.06 per diluted share.

• SG&A expenses: $8.2 million, slightly above $7.9 million in Q1 2024.

Outlook and guidance

• Management expects gross margin to improve to the mid-20% range for the full year, with seasonality driving higher revenues in Q2 and Q3.

• DLA contract revenue expected to remain at the historical mid-$30 million annualized run rate.

• Additional production capacity for lower GWP refrigerants expected to balance supply and demand by late cooling season.

• Regulatory changes under the AIM Act and new state mandates for reclaimed refrigerant are expected to drive long-term growth.

• Working capital needs expected to be met through cash flow and available credit facility.