Hudson Technologies (HDSN) Earnings Call Transcript

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DATE

Wednesday, March 4, 2026, at 5 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Ken Gaglione
• Chief Financial Officer — Brian J. Bertaux
• Senior Vice President of Sales and Marketing — Kathleen L. Houghton

TAKEAWAYS

• Quarterly Revenue -- $44.4 million in revenue, representing 28% growth, primarily driven by increased sales volume outside the primary selling season.
• Quarterly Gross Profit -- $3.5 million, down from $5.8 million in the prior year’s comparable period, reflecting $4.2 million in inventory-related costs tied to inventory buildup.
• Quarterly Operating Loss -- $11.2 million, impacted by $8.2 million of inventory-related costs and $4.0 million in executive severance; non-GAAP adjusted operating loss was $7.2 million.
• Quarterly Net Loss -- $8.6 million, or $0.20 per diluted share, compared to a $2.6 million loss, or $0.06 per share, with inventory and severance costs cited as primary drivers.
• Annual Revenue -- $246.6 million for 2025, an increase of 4%, primarily from a 6% increase in sales volume partially offset by marginally lower pricing.
• Annual Gross Margin -- 25.2%, compared to 27.7% the previous year, with decline attributed to softer refrigerant prices and increased freight costs.
• Annual Non-GAAP Adjusted Net Income -- $19.7 million, or $0.44 per diluted share, versus $24.7 million, or $0.52 per share, the prior year.
• Annual DLA Contract Revenue -- $38 million recognized under the Defense Logistics Agency contract, with renewal process affected by a competitor’s bid protest and contract award rescinded pending review.
• Reclamation Volume -- Achieved an 18% increase in reclamation volume for the second consecutive year, supported by field initiatives and acquisitions.
• Share Repurchases -- $20 million of company stock repurchased during 2025, including $14 million repurchased in the fourth quarter.
• Inventory Position -- Inventory levels at year-end restored to historical norms (approximately six months of inventory on hand), after reported shortfall impacted some sales earlier in 2025.
• ERP System Deployment -- New ERP system launched in February 2026 to enhance operational efficiency, with "startup inefficiencies" acknowledged for first quarter 2026.
• Acquisition Activity -- Refrigerants Inc. acquired in the fourth quarter to expand recovered refrigerant access and bolster Western U.S. distribution footprint.
• HFC Market Pricing -- Average HFC price "slightly below $6 per pound" at 2025 close and "slightly above $6 per pound" at the time of reporting; market conditions described as balanced, with management noting "small price appreciation."
• Guidance -- Company expects first quarter 2026 revenue will increase by a "low- to mid-single-digit percentage" compared to the prior year; gross margin guidance indicates stability if pricing remains unchanged.

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RISKS

• The Defense Logistics Agency contract renewal was rescinded following a competitor’s bid protest, with the company now awaiting the agency’s review process before a final resolution.
• Fourth quarter results were negatively affected by $4.2 million in inventory-related costs tied to the year-end inventory build, lowering quarterly gross profit. The operating loss for the quarter included $8.2 million in inventory-related costs.
• Startup inefficiencies from the new ERP system were cited as a headwind for first-quarter 2026 operations, though management does not expect these to persist into subsequent quarters.

SUMMARY

Hudson Technologies’ (NASDAQ:HDSN) call revealed a significant revenue uptick in the fourth quarter, offset by margin compression and larger net losses due to inventory and severance expenses. Management characterized end-market demand as promising, with volume growth and a two-year streak of reclamation gains supported by strengthened sourcing capabilities. The company noted that regulatory developments, including the DLA contract award rescission, could impact government business continuity, but affirmed ongoing fulfillment under the current contract.

• Ken Gaglione stated, "I do not believe this is a time for a transformative change. It is not necessary for our company right now. Instead, it is a time for diversification of our revenue stream to reduce seasonality and our dependence on a few dominant refrigerants."
• New pilot partnerships with DC Sustainable Energy Utility and the California Air Resources Board were established to advance refrigerant recovery and reclamation, with early results including "600,000 pounds of equivalent CO2 emissions" avoided in Washington, D.C., alone.
• HFO aftermarket demand is not expected to rise materially until 2027, with 2026 described as a transitional year for service mix.
• Company intends to maintain disciplined capital allocation, with continued investment in infrastructure, inventory, and technology, alongside ongoing share repurchases under a $20 million authorization.
• Strategic focus includes expansion of proactive commercial HVAC services and pursuit of additional acquisitions to support market positioning.

INDUSTRY GLOSSARY

• DLA (Defense Logistics Agency): U.S. Department of Defense entity responsible for supplying military logistics, cited here regarding a material government contract for refrigerant products and services.
• HFC (Hydrofluorocarbon): Class of refrigerants being phased out due to environmental regulations and replaced by alternatives such as HFOs.
• HFO (Hydrofluoroolefin): Next-generation refrigerant with lower global warming potential, increasingly relevant in regulatory and industry transition periods.
• ERP (Enterprise Resource Planning): Integrated IT platform for managing core business processes, implemented by Hudson Technologies, Inc. to improve operational efficiency.
• SG&A (Selling, General, and Administrative expenses): Financial category encompassing non-production corporate expenditures reported on the company’s income statement.
• Gross Margin: Percentage of revenue remaining after subtracting cost of goods sold, indicating efficiency of production and pricing relative to sales.

Full Conference Call Transcript

Ken Gaglione, Hudson Technologies, Inc.'s President and Chief Executive Officer; Brian J. Bertaux, CFO; and Kathleen L. Houghton, Hudson Technologies, Inc.'s Senior Vice President of Sales and Marketing. I will now take a moment to read the safe harbor statement. During the course of this conference call, we will make certain forward-looking statements. All statements that address expectations, opinions, or predictions about the future are forward-looking statements. Although they reflect our current expectations and are based on our best view of our businesses as we see them today, they are not guarantees of future performance.

Please understand that these statements involve a number of risks and assumptions, and since those elements can change and, in certain cases, are not within our control, we ask that you consider and interpret them in that light. We urge you to review Hudson Technologies, Inc.'s most recent Form 10-Ks and other subsequent SEC filings for a discussion of the principal risks and uncertainties that affect our business and our performance and of the factors that could cause our actual results to differ materially. During the call, we will also be referring to certain non-GAAP financial measures.

For a detailed reconciliation of these measures to GAAP financial measures, we refer you to the press release issued earlier this afternoon and the 8-Ks filed this afternoon with the SEC. With that, we will now turn the call over to Ken Gaglione. Please go ahead, Ken.

Ken Gaglione: Good evening, everyone, and thank you for joining us. Since returning to Hudson Technologies, Inc. as CEO in November, I have already had a chance to speak with many of you, and I am pleased to have this opportunity tonight to address a broader audience of investors and analysts. It has been a very busy and productive three months with our internal operating teams as well as with key customers. There have been many positive changes and a lot of progress in the few years since I left Hudson Technologies, Inc., and I found the underlying foundation of the company on my return remains very solid.

Hudson Technologies, Inc. is comprised of a tremendous group of knowledgeable and service-oriented professionals with a commitment to delivering innovation and sustainable refrigerant products, services, and technology that our customers need in this continuously evolving, frequently complex HVAC landscape. I am excited to be back and to have this opportunity to lead Hudson Technologies, Inc. as we write our next chapter. Before we get into the financial results, I want to take this opportunity to discuss my vision for Hudson Technologies, Inc. and our strategy and priorities going forward. As you know, Hudson Technologies, Inc. has been an industry leader and an innovator in reclamation and refrigerant management service for decades. Our founder pioneered refrigerant reclamation in the U.S.

We successfully navigated two previous refrigerant phase-outs—CFCs in the late 1990s and HCFCs in the mid-2000s—and now we are currently moving through another phase-down of HFCs to HFOs. Our core business of refrigerant reclamation, sales, and associated services remains the focus of our organic growth strategy. This is critical to our commitment to refrigerant lifecycle management and sustainability, whereby we help to ensure optimum system performance using environmentally beneficial reclaimed refrigerants. There are many opportunities for our continued growth in support of this core mission. In the near term, and in alignment with our capital allocation strategy, we are focused on investing in a few concentrated areas that I would like to speak about tonight: infrastructure, inventory, and ERP.

First, investing in our infrastructure includes expanding our separation technology and automation to ensure we are well prepared and positioned to meet the evolving needs of our customers and the new, complex HFO refrigerant blends. Additionally, we are investing in inventory that is crucial to our operations and supports our well-earned reputation for efficiently supplying our customers with the refrigerants they need when they need them. Looking back, we were somewhat light on inventory at the end of 2024 and, as a result, missed delivering on some orders during the 2025 selling season, a situation that was corrected in the fourth quarter.

We remain committed to investing in our inventory so that we are well positioned to deliver the service excellence that our customers have come to rely on. More recently, we went live with the new ERP system in February 2026. This will add connectivity to our operation and provide a more efficient platform for our ability to reliably serve our customers. Like many new ERP implementations, we have had our share of startup headaches, which Brian will cover in more detail. Second, we are focused on the organic and strategic expansion of our service capabilities in the commercial market.

In the short time that I have been back and working with our internal teams, we have identified several opportunities to apply our existing technology and expertise to provide additional service offerings to our customer base. The HVAC market has a multitude of servicing needs, and we believe we have an opportunity to capture more of that demand. Some examples include the separation and packaging of new refrigerant blends that require specialized balancing and handling, providing new methods to recover refrigerant from underserved segments of the market, and HVAC system optimization services, just to name a few. Third, we will continue our disciplined approach to accretive acquisitions.

In conjunction with driving organic growth, we will continue to evaluate acquisition and alliance opportunities that complement our core capabilities and/or strengthen our geographical presence in market. Our recent acquisition of Refrigerants Inc. is an example of that approach and has given us an enhanced presence in the western portion of the U.S. for both securing recovered refrigerant and refrigerant distribution. And lastly, fourth, returning capital to our shareholders via our opportunistic stock repurchase program. We repurchased $20,000,000 in stock during 2025 and intend to continue our practice of opportunistic buybacks in 2026.

Let me take this opportunity to acknowledge that these build upon the strong foundation passed to me from my predecessor, and for that, I and the company are truly grateful. I do not believe this is a time for a transformative change. It is not necessary for our company right now. Instead, it is a time for diversification of our revenue stream to reduce seasonality and our dependence on a few dominant refrigerants. Our entire team here is committed to capitalizing on the opportunities in front of us this year. Now I will touch briefly on fourth quarter and full-year results before turning the call over to my colleagues.

As many of you know, Q4 is historically our weakest quarter from a sales volume perspective as it falls outside of our nine-month selling season. Nonetheless, we delivered impressive revenue growth of 28% in the fourth quarter 2025, primarily related to strong sales volume, which we believe is a promising indicator of the demand environment going into 2026 and a validation of our focus on driving volume by exceeding customer expectations. Additionally, during the fourth quarter, we completed our accretive acquisition of Refrigerants Inc., headquartered in Denver, which strengthens our presence and access to the recovered refrigerant supply chain in the western United States. I will give you a brief overview of our full 2025 financial performance.

We grew 4% for the full year to $246,600,000 in annual sales, with volume growth of 6%. Our gross margin was 25%, and we posted non-GAAP adjusted net income of $19,700,000, or $0.44 per diluted share. Also important here is that 2025 marks our second consecutive year in achieving an 18% increase in reclamation volume. This is directly related to our activities at the contractor level. As we frequently mention in these calls and elsewhere, refrigerant recovery is critical to the reclamation process, and Hudson Technologies, Inc. has been an industry leader in building awareness among contractors around the importance of recovery, both from a sustainability standpoint and an economic perspective.

We have substantially heightened our ability to secure recovered refrigerant via our acquisitions of USA Refrigerants and Refrigerants Inc., which expanded our recovery team and our geographic reach. Expanding reclamation as a critical part of our supply chain will be increasingly important with the EPA’s further reduction in consumption allowances in 2029. I will take a moment now and turn to our work for the Defense Logistics Agency, or the DLA. Last year, we recorded revenue of $38,000,000 for the full year under our DLA contract. As many of you know, during the fourth quarter, we announced that we had been awarded the renewal of our DLA contract to support the U.S. military as a prime contractor.

In late January 2026, just this last January, we were notified that a competitor had filed a bid protest regarding an administrative challenge to the DLA’s evaluation of proposals and the contract award to Hudson Technologies, Inc. The contract award has been rescinded while the DLA conducts its review of its internal processes. And while this development is disappointing, Hudson Technologies, Inc. has a proven and successful ten-year working relationship with the DLA. We will continue providing logistics support on our existing contract, which runs through 2026. We are determined to preserve our position as a valued partner to the DLA while this protest is being resolved, and we will provide further updates as we learn more.

In closing, I would say overall, I am very pleased—we are very pleased—with our solid fourth quarter close to 2025, and we are energized for the opportunities we see to grow our business. Now I will turn the call over to Kathleen L. Houghton, our Senior Vice President of Sales and Marketing, to provide some additional detail around Hudson Technologies, Inc.'s market opportunities.

Kathleen L. Houghton: Thank you, Ken, and good evening, everyone. We executed well in the fourth quarter and delivered increased sales volume in what is historically our seasonably slowest quarter when a large portion of our customers transition from cooling applications to heating. In fact, our execution in 2025 offset what had been a late start to our nine-month cooling season. It is still relatively early in the year, but as we begin the 2026 cooling season, we currently see supply and demand as balanced in the market with some slight refrigerant price appreciation.

At the close of 2025, the average price of HFCs was slightly below $6 per pound, and as we report to you today, it is slightly above $6 per pound. As Ken mentioned, for the second consecutive year, we achieved an 18% increase in reclamation volume. We believe our solid growth reflects our successful grassroots efforts to promote recovery and reclamation activities to the field technicians who facilitate the recovery and return process, as well as the expanded recovery capabilities resulting from our acquisitions of USA Refrigerants and Refrigerants Inc.

During the fourth quarter, we continued to actively engage with our refrigeration technician and contractor partners to highlight the environmental and economic benefits of recovering and returning refrigerants rather than venting refrigerants. We will continue these efforts as we move through 2026 and beyond. In addition to our industry outreach during 2025, we also launched two innovative reclaim pilot programs to promote recovery and reclamation process and technology. In September, we began our partnership with DC Sustainable Energy Utility, or DCSEU, to establish the nation’s first refrigerant recovery and reclamation pilot in Washington, D.C. The program is linked to DCSEU’s greenhouse gas emission goals.

Through this pilot, Hudson Technologies, Inc. provides HVAC contractors with training on recovery best practices, supplies proper storage containers for used refrigerants, covers shipping and logistics, and offers financial incentives for recovered refrigerant. The pilot is off to a strong start with early positive results. Participating contractors have avoided 600,000 pounds of equivalent CO2 emissions by reclaiming with Hudson Technologies, Inc., and the program is set to expand to a wider range of participating contractors this year. We are encouraged that the DCSEU program is also thinking about refrigerant recovery as greenhouse gas CO2e reduction, rather than the typical view of reduced energy consumption.

This approach is key to encouraging utilities around the country to accelerate the support of refrigerant reclamation in decarbonization efforts. In December 2025, we announced that Hudson Technologies, Inc. was selected to support the California Air Resources Board, or CARB, with their REFRESH pilot program, the state’s first program to incentivize refrigerant recovery and reclamation. In this pilot, Hudson Technologies, Inc. will partner with contractors who are part of the California Energy Commission’s Equitable Building Decarbonization Direct Install Program to provide training on safe and efficient recovery practices and as a purchaser of recovered HFCs and HCFCs for reclamation.

We are very excited to be part of these innovative new programs and optimistic that we will continue to see additional opportunities as more state and local governments adopt legislation mandating the use of reclaimed refrigerants. Finally, I would like to take a minute to address the recent development at the EPA revoking the endangerment finding established in the Obama administration. The endangerment finding has served as a basis for regulating certain pollutants, including HFCs, under the Clean Air Act. The rescission of this endangerment finding primarily limits EPA’s ability to develop further HFC regulations under the Clean Air Act. We do not believe it will affect the AIM Act’s independent statutory authority for the HFC phasedown.

OEMs and refrigerant producers are already well on their way in developing next-generation, lower-GWP alternatives to HFC refrigerants and equipment, and Hudson Technologies, Inc. remains in a strong position to reclaim and provide HFCs to meet the anticipated continued demand until at least 100,000,000-plus units reach the end of their useful lives. As we begin to move through 2026, I want to echo Ken’s comments about our optimism for what lies ahead for Hudson Technologies, Inc.

We have a strong foundation to build from, which includes our longstanding customer base; leadership position as a supplier of both virgin and reclaimed refrigerants of all types; innovative thinking to engage nontraditional industry partners in the growth of refrigerant recovery; sophisticated field service capabilities; and the ability to leverage our proprietary technology and expertise to drive growth. With our renewed focus on expanding our core business through complementary opportunities and focused strategic expansion in complementary areas, we believe we are well positioned to grow our leadership role in the marketplace. Now I will turn the call over to Brian J. Bertaux to review our fourth quarter and full-year 2025 results. Go ahead, Brian. Thank you.

Brian J. Bertaux: First, I will review our Q4 2025 financial results with a comparison to Q4 2024. We recorded $44,400,000 in revenue, an increase of 28% primarily driven by increased sales volume. As Kate noted, our strong sales volume execution in 2025 more than offset what had been a late start to our nine-month selling season. We posted gross profit of $3,500,000 compared to $5,800,000 in Q4 2024. The Q4 2025 gross profit reflected the impact of $4,200,000 of inventory-related costs, including a lower of cost or market adjustment resulting from the fourth quarter inventory build. Hudson Technologies, Inc. recorded SG&A expenses of $13,900,000 compared to $8,000,000 in Q4 2024. SG&A in May included $4,000,000 of executive severance costs.

Excluding the $4,000,000 severance costs, non-GAAP adjusted SG&A was $9,900,000 compared to $8,000,000 in Q4 2024, with the variance related to increased staff. Operating loss was $11,200,000 compared to an operating loss of $3,200,000 in Q4 2024. The Q4 2025 operating loss includes $8,200,000 in inventory-related costs and the $4,000,000 severance costs. Non-GAAP adjusted operating loss, which excludes the $4,000,000 of severance-related costs, was $7,200,000 compared to a Q4 2024 operating loss of $3,200,000. We recorded a net loss of $8,600,000, or $0.20 per diluted share, which includes the after-tax impact of the $8,200,000 of previously described costs, compared to a net loss of $2,600,000, or $0.06 per diluted share, in Q4 2024.

Non-GAAP adjusted net loss was $5,400,000, or $0.13 per diluted share, which excludes the after-tax impact of the $4,000,000 executive severance cost, compared to a non-GAAP net loss of $2,600,000, or $0.06 per share, for Q4 2024. Turning to the full year, Hudson Technologies, Inc. posted $246,600,000 in revenue, a 4% increase from 2024. That increase was primarily related to a 6% increase in sales volume, which was partially offset by slightly lower pricing. Revenue from our DLA contract was $38,000,000 in 2025. 2025 gross margin was 25.2% compared to 27.7% in 2024. This reflects slightly lower refrigerant market prices and higher freight costs. 2025 SG&A was $40,200,000 compared to $33,000,000 in 2024.

Non-GAAP adjusted SG&A was $36,200,000 compared to $32,600,000 in 2024. Excluding the $4,000,000 severance cost, the increase in SG&A includes the midyear 2024 increase to our sales staff. The company recorded operating income of $18,600,000 compared to $29,300,000 in 2024. Non-GAAP adjusted operating income was $22,600,000 compared to $29,700,000 in 2024. The decrease from 2024 reflects the aforementioned lower gross profit and increased SG&A costs, primarily from increased staffing. Hudson Technologies, Inc. recorded net income of $16,700,000, or $0.37 per diluted share, compared to net income of $24,400,000, or $0.52 per diluted share, in 2024.

Non-GAAP adjusted net income and diluted earnings per share were $19,700,000 and $0.44, respectively, compared to non-GAAP net income and diluted EPS of $24,700,000 and $0.52, respectively, for 2024. The company’s unlevered balance sheet remains strong at year-end with $39,500,000 of cash. During the quarter, we demonstrated our commitment to our capital allocation strategy of organic and strategic growth and opportunistic share repurchases. In Q4 2025, we invested in restocking inventory, acquired Refrigerants Inc., and repurchased $14,000,000 of company stock. Investment in inventory at year-end ensures that we are well positioned for the 2026 selling season.

Consistent with our capital allocation strategy, we repurchased $20,000,000 of common stock in 2025, and we expect to continue to pursue opportunistic buybacks in 2026 with our $20,000,000 authorization. As Ken noted, we recently went live with a new ERP system that we expect will add connectivity to our operations and provide a better platform for reliably serving our customers. Like many new ERP implementations, we have experienced some startup inefficiencies in Q1 2026. Despite that headwind, we expect Q1 2026 revenue to increase by a low- to mid-single-digit percentage as compared to Q1 2025, and we do not expect the ERP-related inefficiencies to persist into the second quarter and forward.

Now I will turn the call back to Ken for his closing remarks.

Ken Gaglione: Thank you, Brian. So 2025 was a year of notable changes and foundational progress for Hudson Technologies, Inc. We enter 2026 energized by the opportunities we see to grow our leadership role as a provider of sustainable refrigerant and reclamation products, technologies, and services through strong execution as well as through our strategy to expand our core capabilities by leveraging new opportunities in adjacent markets. Operator, we will now open it up for questions.

Operator: Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. If you have a question or a comment, please press 1. Our first question comes from Gerard J. Sweeney with ROTH Capital. Please proceed.

Gerard J. Sweeney: Hey, good evening. I just wanted to talk about—you highlighted some of your key focuses going forward: organic and accretive—and specifically wanted to get an idea of what you were thinking in terms of opportunities around service, HVAC optimization, and removing some of the, for lack of a better word, focus on just refrigerants and reclamation and reducing some seasonality.

Kathleen L. Houghton: Yeah. Absolutely, Gerry. Thanks for the question. So

Ken Gaglione: I will add a little color to that. And when people think about services in the HVAC industry, they tend to immediately think about contracting services—people that show up in the driveway, the technicians. But that is not really what we are speaking about directly. When we talk about our services expansion, we are looking at other types of services—and there are a lot of them—that are hidden behind, let us say, chiller operation that people are less familiar with, including proactive services where we monitor and measure chiller performance. We look at other aspects of the chiller in terms of its operating performance, which we have been doing with our services group for some time.

And there are adjacencies, too, where there are services that we can provide with new infrastructure capabilities for A2L refrigerants—HFO refrigerants, complicated HFO refrigerant blends—that we feel we have a unique advantage in the marketplace to take to help balance those refrigerants, package them, and redeploy them.

Gerard J. Sweeney: Gotcha. And when you are talking chillers, you are referencing commercial-sized opportunities. How do you go about opening up this opportunity? Obviously, Hudson Technologies, Inc. has had a service component that has been around for years and maybe has received less attention from the investment community. Curious how you build this out.

Kathleen L. Houghton: Yeah. Great, great question, Gerry. So thinking about it, as Ken touched upon, thinking about taking our services in a more proactive manner versus an emergency response. So Hudson Technologies, Inc. is very well known in the industry for an emergency response to large chiller-built systems. But taking our expertise into that stage before you have to have an emergency response—how do you better manage that chiller? How do you proactively think about it as an asset? And all the things that go into that with the refrigerant circuit is one of those areas that we are focusing on and spending more time on lately.

Gerard J. Sweeney: One more question. This may be very early in the process, but do you have any aspirational targets as to where revenue could be in terms of opportunities outside just direct refrigerant distribution—so maybe a balancing perspective?

Ken Gaglione: Yeah. That is a little hard to say, but we do have some targets we are developing, Gerry, in terms of percentages of sales. And as I said earlier, the key for us is to reduce our dependency on certain refrigerants as we go forward into our strategic plan. So I think we will be able to give you a little better guidance on that in the coming months. But right now, it is a little bit early to say.

Gerard J. Sweeney: Fair enough. I appreciate it. I will hop back in the queue.

Operator: Next question is from Ryan Ronald Sigdahl with Craig-Hallum. Please proceed.

Matthew Robb: Hey, thanks. This is Matthew Robb on for Ryan. I want to start on HFC pricing. It seems like things are mostly stable. I think you mentioned slightly above $6 a pound. Just any update on the trends you are seeing, whether it be inventory, what is going on in channel, what you are hearing from techs in the field. And then I do not know if I caught it—was there any change in expectation on pricing for 2026 as a whole?

Kathleen L. Houghton: Yeah. That is, again, a great question, Matthew, and thank you for that. So as we said when we came into the beginning of the year, pricing—and typically we are talking, you know, use R-410A as a bellwether, the dominant HFC refrigerant—which was a little bit below $6 a pound. As we are talking to you today, it is a little bit above $6 a pound. We see right now that the market is balanced in terms of supply and demand, so not seeing indications right now of some of the shortages and disruptions that happened in the market last year. We are seeing the signs of small price appreciation.

It is still a little early in the year—some places in the country, including Woodcliff Lake, New Jersey, have two feet of snow on the ground—and not a lot of people are thinking about turning on their ACs yet. But we are starting to see a little bit of upward price appreciation, and we think we will see that continue.

Matthew Robb: Understood. Maybe moving over to HFOs. Broadly, do you have any expectation for the mix in 2026? We have heard from some of the OEMs that the aftermarket demand for HFOs is going to kick in more so in 2026. Do you have any thoughts on what that mix could be for Hudson Technologies, Inc.? And then any commentary on HFO pricing versus HFC pricing would be helpful. Thanks.

Ken Gaglione: Let me take a stab at it, Ryan. I mean, the HFO demand for a company like Hudson Technologies, Inc. is all service demand. Right? It is all aftermarket demand. And the buildout for HFOs is ongoing for first fill and OEM, as you mentioned. So I am not expecting—we are not expecting—to see any real significant increase in HFO demand from our side till 2027. We see it today. We see it. We get it. We understand it. We know how to rebalance it. But in terms of actual, real, continuous service demand, I would not think it would be second half of this year. I think more likely you are looking at early next year.

Matthew Robb: Understood. Thank you very much.

Operator: The next question is from Austin Nathan Moeller with Canaccord. Please proceed.

Austin Nathan Moeller: Hi, good afternoon. Just my first question here, how much cylinder inventory do you expect to need to meet demand in 2026? And how close are you to that target given the build?

Brian J. Bertaux: We really do not speak to the cylinder count; however, we have the inventory both in refrigerants and cylinders. Again, not to short the market, we leaned in heavy, so we feel ready and equipped to meet all demands in 2026.

Austin Nathan Moeller: Okay. And what do you view as the most important factor this year to improving the gross margin relative to last year? Is it just appreciation in pricing? Or are there other factors we should be focused on?

Brian J. Bertaux: Well, in addition—I mean, pricing is one variable—but we work day in and day out. We use fixed asset investments to automate things and to reduce costs. We have a new ERP system that we spoke to that should provide us efficiencies—better information, better information to make informed decisions. So with information, with investments in fixed assets, and just focus on continuous improvement, we find ways to reduce costs.

Ken Gaglione: Excellent. I will pass it back there. Thanks.

Operator: Once again, if you have a question or a comment, please press 1. Next question comes from Josh Nichols with B. Riley. Please proceed.

Matthew Wallace: Hi. This is Matthew Wallace on for Josh Nichols. Thanks for taking my questions. I guess to start off on the inventory build, you mentioned feeling light on inventory at the end of 2024, not having enough firepower in 2025. So I am wondering, at what price levels were you accumulating in April? And how does the FIFO dynamic set up for margins as you sell through the peak season?

Brian J. Bertaux: Yeah. So just, number one, if you historically looked over, say, the last seven years, we typically have maybe a little bit more than six months of inventory on hand at any given year. And we entered 2024 significantly below that. So we did miss some sales. It did not move the needle. We just—as far as our reliability and service to our customers—we do not want to miss one sale. So for 2025, we just went back up to more historical standards and around a six-month inventory days on hand.

Matthew Wallace: Got it. So then with pricing at around $6 a pound and inventory restocked, I am assuming at similar levels, how should we think about gross margins for 2026 directionally?

Brian J. Bertaux: Gross margins for 2026—and as we noted in our last call—if there is no real change in pricing, then really our gross margin for 2026 should be comparable to 2025.

Matthew Wallace: Got it. And just last one on the DLA. Is there any update on the bid process timeline? And should we assume a similar $38,000,000 run rate for 2026 under the existing contract?

Ken Gaglione: I think that is a fair assumption. We think we are good through the end of this contract that we have currently. We see it continuing through the end of the year. So that is our projection as well. And I think the updates—there has been some recent activity that is positive for us—but it is hard to know right now what the timing looks like. I would rather not comment about it. It is a convoluted process they go through, but I think in the end, we are very optimistic that we are going to prevail.

Matthew Wallace: Great. That was all for me. Thank you for your time.

Ken Gaglione: Thank you.

Operator: We have reached the end of the question-and-answer session. I will now turn the call over to management for closing remarks.

Ken Gaglione: All right. Thank you, Operator. I appreciate everyone’s interest in Hudson Technologies, Inc. I think you understand that we have a lot of opportunity here for growth. On behalf of Kate, Brian, and myself, I want to thank our employees—particularly our employees—for their commitment to our success. We also want to thank you for your interest and support of Hudson Technologies, Inc.’s mission and our commitment to the sustainable practices around refrigerant lifecycle management. At Hudson Technologies, Inc., that is not just a slogan. It is not just words. It is actually something that we really believe in, and we believe in effective refrigerant lifecycle management.

We look forward to speaking with you in May to discuss our first quarter 2026 results.

Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.

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