HDSN Q1 Earnings Call: Higher-Than-Expected Profit Despite Refrigerant Price Headwinds

Refrigerant services company Hudson Technologies (NASDAQ:HDSN) announced better-than-expected revenue in Q1 CY2025, but sales fell by 15.2% year on year to $55.34 million. Its non-GAAP profit of $0.06 per share was significantly above analysts’ consensus estimates.

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StockStory’s Take

Hudson Technologies’ first quarter results were shaped by lower refrigerant market prices, which offset modest sales volume gains and led to a double-digit revenue decline. CEO Brian Coleman attributed the gross margin compression to continued pricing pressure for key refrigerants, particularly HFC 410A, but noted that the company saw increased reclaim activity and early benefits from the acquisition of USA Refrigerants. Coleman remarked, “We are pleased to have started 2025 with slightly improved sales volume… but we did see a revenue decline as expected.”

Looking ahead, management is monitoring the impact of new tariffs and regulatory changes on both supply costs and demand dynamics. Coleman highlighted that ongoing supply chain disruptions and the evolving regulatory environment—specifically the AIM Act’s phasedown of HFCs—are introducing uncertainty into both pricing and market demand. He added, “The current situation is creating uncertainty, both for our costs and for our prices to our customers,” emphasizing the need for vigilance as the cooling season progresses.

Key Insights from Management’s Remarks

The first quarter saw Hudson Technologies experience a notable decline in revenue, primarily due to lower refrigerant pricing that outweighed gains in sales volume. Management provided additional context on the drivers of this performance, highlighting several industry and company-specific developments.

• Refrigerant price declines: Refrigerant prices, especially for HFC 410A (which makes up roughly 70% of aftermarket HFC demand), were about 40% lower than the prior year. Management cited both supply chain disruptions and increased tariff-related costs as major contributors to this environment.
• Reclamation volume growth: The company reported higher reclaim volumes, attributing this to both the acquisition of USA Refrigerants and increased industry focus on recovery and reclamation. Management believes ongoing educational efforts and new regulatory requirements supporting reclamation are beginning to shift contractor behavior.
• Tariffs and supply chain disruptions: Tariffs on imported refrigerants and raw materials, particularly steel for cylinders, have increased costs for both virgin and next-generation refrigerants. These costs are being passed through the distribution chain, but with some uncertainty as to how lasting the impact will be.
• Transition to lower-GWP refrigerants: The industry is currently navigating the Technology Transition Rule, which mandates a shift from higher-global warming potential (GWP) HFCs to lower-GWP alternatives. Management noted that demand for new refrigerants is outpacing supply, leading to short-term shortages and elevated costs.
• Balance sheet and capital allocation: The company ended the quarter with $81 million in cash and no debt, providing flexibility for ongoing buybacks, potential acquisitions, and investment in organic growth. Hudson has repurchased $4.5 million in stock so far in 2025.

Drivers of Future Performance

Management’s outlook for the coming quarters is shaped by ongoing regulatory changes, evolving supply-demand dynamics for refrigerants, and the company’s ability to adapt to cost pressures and capitalize on reclamation opportunities.

• Regulatory and tariff impacts: The evolving tariff landscape and the EPA’s review of AIM Act regulations are expected to drive both supply-side costs and customer pricing. Management noted ongoing uncertainty about the duration and magnitude of these impacts.
• HFC phasedown and reclamation: Mandatory reductions in virgin HFC supply and new municipal requirements for reclaimed refrigerants are expected to support long-term demand for Hudson’s reclamation services, though timing and adoption rates remain variable.
• Seasonal and weather-related demand: Management emphasized that cooling season weather patterns will heavily influence short-term demand. The company will have more visibility into supply-demand balance and pricing stability as temperatures rise in major markets.

Top Analyst Questions

• Ryan Sigdahl (Craig-Hallum): Asked whether recent price increases are driven solely by tariffs or reflect lasting market changes. CEO Brian Coleman responded that supply chain disruptions and tariffs are currently pushing prices higher, but it is too early to determine if this is temporary or a new trend.
• Ryan Sigdahl (Craig-Hallum): Inquired about the impact of cylinder shortages and inflation on margins, given Hudson’s large inventory of reusable cylinders. Coleman noted Hudson’s relative advantages but highlighted new requirements for cylinder valves and ongoing supply disruptions that could affect margin.
• Ryan Sigdahl (Craig-Hallum): Questioned whether macroeconomic factors are accelerating reclamation. Coleman reported double-digit reclaim volume growth in Q1, driven more by contractor education and partnerships than by tariffs or inflation alone.
• Austin Moeller (Canaccord): Asked about the effect of tariffs on refrigerant imports from Mexico. Coleman explained that limited Mexican production means tariffs on India and China have a larger market impact than USMCA rules.
• Matthew (B. Riley Securities): Sought clarification on DLA contract cadence and inventory normalization. Coleman stated that DLA contract volumes remain steady and inventory levels are approaching normalization.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the pace of price stabilization or additional volatility in refrigerant markets as the core cooling season unfolds, (2) tangible progress in the adoption of reclaimed refrigerants—especially in response to new municipal and regulatory mandates, and (3) Hudson’s ability to pass through higher supply-side costs without further margin erosion. Ongoing regulatory developments tied to the AIM Act and EPA review will also be key factors to watch.

Hudson Technologies currently trades at a forward EV-to-EBITDA ratio of 10.1×. At this valuation, is it a buy or sell post earnings? See for yourself in our free research report.

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