HDSN Q2 Deep Dive: Pricing Strength and Supply Dynamics Offset Slower Volumes

Refrigerant services company Hudson Technologies (NASDAQ:HDSN) announced better-than-expected revenue in Q2 CY2025, but sales fell by 3.2% year on year to $72.85 million. Its non-GAAP profit of $0.23 per share was 53.3% above analysts’ consensus estimates.

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StockStory’s Take

Hudson Technologies’ second quarter results received a positive market reaction, with management attributing performance to improved refrigerant pricing and resilient demand in its core reclamation business. CEO Brian Coleman highlighted that a late start to the cooling season, driven by cooler spring weather, dampened sales volumes, but sequential price increases—partly influenced by tariffs—helped support gross margins. While volumes were slightly lower year over year, management cited solid execution in maintaining supply and servicing customer needs, noting, “we did see a lift in nearly all refrigerant pricing, some of which had to do with tariff increases.”

Looking ahead, management expects continued growth opportunities as industry regulations phase down the supply of virgin HFC refrigerants, creating a longer demand tail for reclaimed products. Coleman emphasized Hudson’s positioning for these regulatory shifts, stating that ongoing developments under the AIM Act and new state-level mandates could further expand demand for reclaimed refrigerants. The company is also focused on supporting the transition to next-generation, lower-global warming potential (GWP) refrigerants, with ongoing investments in technician training and broader customer outreach expected to underpin future growth.

Key Insights from Management’s Remarks

Management credited improved market pricing, regulatory tailwinds, and proactive customer engagement for the quarter’s performance, while pointing to ongoing industry transitions as a source of future upside.

• Refrigerant pricing uplift: Sequential price increases, particularly for HFC 410A, supported margins despite lower sales volumes. Coleman noted that HFC pricing reached $8 per pound during the quarter, marking the first sequential increase in two seasons and helping to offset weather-driven volume declines.
• Reclamation business momentum: The company’s reclamation segment benefited from expanded recovery capabilities and a growing network of contractor partners. Houghton, Senior Vice President of Sales and Marketing, highlighted increased sales activity late in the quarter, and ongoing efforts to educate and incentivize contractors for refrigerant returns.
• Tariffs impact pricing: Tariff fluctuations on imported refrigerants and steel contributed to volatility in product prices. Coleman explained that tariff-driven price movements generally favor Hudson’s U.S.-sourced reclaimed gas, as these products are insulated from import cost pressures and generate higher incremental margins.
• Regulatory phase-down tailwinds: The federally mandated HFC phase-down under the AIM Act, along with new state initiatives requiring reclaimed refrigerant in public buildings, is expected to drive long-term demand. Management emphasized that the installed base of HFC equipment—typically with 20-year lifespans—will require reclaimed refrigerants well into the future.
• Customer education and outreach: Hudson ramped up efforts to train HVACR contractors on recovery best practices, participating in industry conferences and direct training events. Houghton reported that these initiatives are expanding the contractor base engaged in reclamation, which is seen as critical to supporting supply as regulation tightens access to virgin refrigerants.

Drivers of Future Performance

Hudson’s outlook is shaped by the ongoing regulatory transition away from virgin HFCs, expected pricing dynamics, and investments in customer and contractor engagement.

• HFC phase-down accelerates demand: Management believes that as AIM Act mandates further restrict new HFC supply, the need for reclaimed refrigerants will rise, creating a multi-year growth opportunity as the existing installed base requires ongoing servicing.
• Expansion in next-generation refrigerants: The company is investing in capabilities to supply A2L refrigerants—lower-GWP alternatives—and expects aftermarket demand for these products to expand, especially as legacy HFC equipment is phased out and new systems are installed.
• Pricing and tariff volatility: While recent price increases have bolstered margins, Coleman noted that continued volatility due to tariffs and shifting import flows could impact future profitability. However, reclaimed refrigerant margins should remain relatively resilient to these pressures.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be monitoring (1) the pace of contractor adoption and participation in reclamation programs as regulatory supply constraints intensify, (2) pricing trends for both HFC and next-generation refrigerants amid ongoing tariff and supply chain volatility, and (3) progress in securing long-term contracts such as the DLA renewal. Additionally, execution on customer education and expansion into lower-GWP refrigerants will be crucial indicators of Hudson’s ability to capture emerging market opportunities.

Hudson Technologies currently trades at $9.89, up from $8.31 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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