Hudson Technologies, Inc. (HDSN) - Q2 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2026. Hudson Technologies, Inc. is a leading provider of sustainable refrigerant products and services to the HVACR industry, specializing in refrigerant reclamation, sales, and system decontamination services (RefrigerantSide®). The company operates as a single reportable segment.
Key Financial Metrics (Six Months Ended June 30, 2026)
| Metric | 2026 (YTD) | 2025 (YTD) | Change |
|---|---|---|---|
| Revenues | $138.5 million | $128.2 million | +8.0% |
| Gross Profit | $32.5 million | $34.9 million | -6.9% |
| Gross Margin | 23.5% | 27.2% | -370 bps |
| Operating Income | $8.9 million | $15.8 million | -43.9% |
| Net Income | $5.3 million | $12.9 million | -59.2% |
| Diluted EPS | $0.12 | $0.28 | -57.1% |
| Cash & Equivalents | $25.6 million | $39.5 million (Dec 31, 2025) | -$13.9 million |
| Operating Cash Flow | ($6.0 million) used | $20.6 million provided | Significant Decline |
| Debt Outstanding | $0 | $0 | — |
| Working Capital | $150.6 million | $146.2 million (Dec 31, 2025) | +$4.4 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 8% year-over-year, driven primarily by higher sales volumes. This growth was partially offset by lower average market prices for refrigerants.
- Margin Compression: Gross margin declined from 27.2% to 23.5%. Management attributed this to lower average sales prices and increased freight costs.
- Expense Increase: Selling, General, and Administrative (SG&A) expenses rose by $4.6 million (26%) to $22.0 million, due to higher personnel costs, professional fees, and IT expenses.
- Cash Flow Deterioration: Operating cash flow turned negative ($6.0 million used) compared to a positive $20.6 million in the prior year. This was driven by a significant increase in trade receivables ($26.2 million increase) and timing of inventory adjustments.
- Share Repurchases: The company repurchased 416,480 shares for $2.5 million in Q1 2026. No shares were repurchased in Q2 2026.
Outlook, Risks, and Contingencies
- DLA Contract Resolution: A significant contingency regarding the U.S. Defense Logistics Agency (DLA) contract was resolved. After a competitor's bid protest led to a rescinded award in late 2025, the company received a bridge extension in May 2026. On August 4, 2026 (subsequent to the period end), the company was re-awarded the contract through August 2031 with a five-year renewal option.
- Customer Concentration: The DLA accounted for over 10% of revenue and 9% of accounts receivable in the first half of 2026. One additional customer represented 20% of accounts receivable.
- Regulatory Environment: The company is subject to the AIM Act, which phases down virgin HFC production. Reclamation is not restricted, but supply chain dynamics and regulatory changes regarding refrigerant management remain key risks.
- Liquidity: The company maintains a $40 million revolving credit facility with Wells Fargo. As of June 30, 2026, there was no outstanding balance, and approximately $40 million in availability remained. The company is in compliance with all financial covenants.
- Acquisition: The company completed the acquisition of Refrigerants Inc. in December 2025 for approximately $4.0 million in total consideration (including contingent earn-out), expanding its geographic footprint and supply chain access.
Investor Verification Checklist
- Verify the sustainability of the 8% revenue growth given the headwinds from lower refrigerant market prices.
- Monitor the trajectory of SG&A expenses, which increased significantly faster than revenue.
- Assess the impact of the $26 million increase in accounts receivable on future cash conversion cycles.
- Confirm the execution of the re-awarded DLA contract and its impact on Q3 and Q4 2026 revenue recognition.
- Review inventory levels ($128.1 million) and potential exposure to further write-downs if market prices continue to decline.