Hudson (HDSN) Q2 EPS Jumps 15%

Key Points

• GAAP EPS of $0.23 surpassed expectations by $0.06 in Q2 2025 and

• GAAP revenue of $72.8 million beat estimates in Q2 2025, but representing a 3% decrease year over year.

• Gross margin improved to 31% in the second quarter despite lower sales volume, reflecting positive pricing and reclamation trends.

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Hudson Technologies (NASDAQ:HDSN), a specialist in refrigerant products and reclamation services, reported its second quarter earnings on July 30, 2025, for the period ending June 30. The most notable news from the release was a solid earnings beat, as GAAP EPS reached $0.23 — above the $0.17 GAAP analyst estimate — and GAAP revenue came in at $72.8 million, also exceeding the $71.7 million GAAP consensus. While profit and margins (GAAP) improved, GAAP revenue declined year over year, driven by softer sales volumes amid mild weather conditions in key markets. The quarter highlighted both operational progress and underlying challenges, with management underscoring positive momentum in its reclamation business and continued discipline with capital allocation.

Source: Analyst estimates for the quarter provided by FactSet.

Company and Business Overview

Hudson Technologies is an environmental services company focused on refrigerant supply, reclamation, and management solutions. Its core operations include the sale and recovery of refrigerants, as well as providing services to reduce environmental impact from cooling systems used in commercial and industrial applications.

The company’s recent strategy centers on expanding its national reclamation footprint, investing in proprietary technologies, and partnering with large original equipment manufacturers and service providers. Critical success factors include its ability to adapt to evolving regulations, grow its recovered refrigerant supply, and provide value-added services that comply with increasingly strict environmental standards.

Quarter in Review: Notable Events and Performance Drivers

GAAP revenue declined compared to the same period a year ago. Management attributed this decline to a slow start to the prime selling season, with particularly mild weather limiting early cooling demand in the Northeast and Midwest regions through early June. Despite lower sales volume, price increases in certain refrigerant products and growth in reclaimed refrigerant sales helped lift gross margin to 31% (GAAP), up from 30% (GAAP) in Q2 2024.

The margin improvement is notable because it occurred against the backdrop of lower overall revenue. The company’s ability to source and reclaim refrigerants grew in part due to the integration of its 2024 acquisition of USA Refrigerants. This acquisition expanded Hudson’s reach and increased recovered volume in the first quarter of 2025, reinforcing its position as national policy increasingly prioritizes reclaim over new production.

Operating income remained stable at $12.7 million compared to $12.8 million in the prior year period (GAAP). even as Selling, general, and administrative costs (GAAP) ticked up slightly to $9.3 million from $9.0 million. Cash and cash equivalents totaled $84.3 million as of June 30, 2025, and the company reported no outstanding debt, This strong cash position and lack of debt as of June 30, 2025, provide capital for future investments or share repurchase programs.

The company also continued its share repurchase program, using $4.5 million to date in 2025. Inventory levels trended lower, marking further normalization after a period of elevated stockpiles. Management reaffirmed that the ongoing government-mandated reduction of hydrofluorocarbon (HFC) refrigerants remains a core opportunity. Reclaimed HFCs are essential for continued servicing of the large installed base of cooling systems as the supply of newly produced HFCs declines.

Business Model, Technology, and Focus Areas

The company’s offerings span refrigerant sales, refrigerant recovery and reclamation services, and lifecycle management of cooling chemicals. It uses proprietary processes such as the Zugibeast system (a refrigerant recycling platform) and SmartEnergy OPS for energy optimization in cooling operations.

Hudson’s key focus areas include regulatory compliance—particularly adapting to phase-down schedules mandated by the AIM Act—and advancing technology to improve reclaim efficiency and support newer, environmentally safer refrigerants like hydrofluoroolefins (HFOs). Strategic partnerships, such as those with industry players like AprilAire and Lennox International, help broaden Hudson’s reach. The company is also investing in education and outreach, encouraging contractors to return used refrigerants for reclamation rather than venting, to support compliance and meet rising mandates for recycled content.

Outlook and Investor Considerations

Management did not provide formal quantitative guidance for the remainder of fiscal 2025 or future quarters. The absence of guidance points to a wait-and-see approach as market and regulatory conditions evolve.

For investors, important issues to monitor in upcoming quarters include the integration and growth impact of the USA Refrigerants acquisition, progress on inventory and working capital management, the evolving regulatory environment, and future trends in pricing for both new and reclaimed refrigerants. As the industry transitions away from newly manufactured HFCs, Hudson’s ability to ramp up its reclamation business while maintaining profitability will be closely watched. HDSN does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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