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Hudson Technologies(HDSN) - 2025 Q2 - Earnings Call Transcript
2025-07-30 22:00
Financial Data and Key Metrics Changes - Hudson Technologies reported revenues of $72.8 million for Q2 2025, a decrease of 3% compared to the same quarter last year [18] - Gross margin improved to 31% from 30% in Q2 2024, driven by favorable market pricing trends [19] - Net income increased to $10.2 million or $0.23 per diluted share, compared to $9.6 million or $0.20 per diluted share in the previous year [20] Business Line Data and Key Metrics Changes - The company experienced slightly lower sales volume compared to Q2 2024, attributed to cooler spring weather and supply shortages [6][18] - Continued strength in the reclamation business was noted, leveraging enhanced refrigerant recovery capabilities [6] - The average selling price of refrigerants increased, with HSC pricing reaching $8 per pound during the quarter [8][20] Market Data and Key Metrics Changes - The regulatory landscape remains influenced by the AIM Act, which mandates the phase-down of HFCs [9] - The company is closely monitoring developments with the EPA regarding regulations that could impact the industry [9] Company Strategy and Development Direction - Hudson Technologies is focused on expanding its purchasing presence in the marketplace and enhancing its reclamation capabilities [6][12] - The company aims to bridge the supply gaps created by the phase-down cycles of HFCs and promote recovery and reclamation activities [14][15] - The capital allocation strategy includes investing in organic growth, pursuing acquisitions, and opportunistic stock repurchases [10][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a slow start to the cooling season but expressed confidence in strong execution for the remainder of the selling season [22] - The company believes its recovery and reclamation capabilities position it well for future growth as the supply of newly manufactured refrigerants becomes limited [22] - Management remains optimistic about the long-term growth opportunities presented by the phase-down of HFCs [13][14] Other Important Information - The company ended the quarter with $84.3 million in cash and no debt, reflecting a strong unlevered balance sheet [20] - Hudson repurchased $2.7 million of stock during the second quarter, with a total of $4.5 million in shares repurchased in 2025 [20] Q&A Session Summary Question: Did the company see any benefit from the repair mix being up in the quarter? - Management noted that repair versus replace was an element of Q2 activity, leading to strong demand in the core business [25] Question: Can the company quantify the A2L market size? - The A2L market is currently relatively small for Hudson, but there is aftermarket demand due to changes in OEM units [26] Question: What is the current price of HFCs? - HFC prices peaked at around $8 per pound, with slight retraction observed [30] Question: How is the reclamation business performing? - The company does not report reclamation activity until the end of the year but is encouraged by the activity going into Q3 [31] Question: What is the status of the DLA contract? - The DLA contract is no longer a small business set aside, and the company is cautious about the competitive landscape for the new contract [62] Question: How do tariffs impact pricing? - Tariffs primarily affect imported refrigerants, benefiting prices for U.S.-sourced reclaimed refrigerants [69] Question: Will the volume of industrial gases and refrigerants in the DLA contract increase? - The company does not have clarity on the new contract's volume expectations but will provide updates once awarded [74]