Hudson Technologies — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third-quarter 2026 revenue was $59.4 million, a 20% decrease from $74.0 million in the third quarter of 2025, driven by a 9% decline in sales volume and a 17% decrease in selling prices.
• Nine-month 2026 revenue was $197.9 million, a 2% decrease from $202.2 million in the first nine months of 2025, as 9% sales volume growth offset a 9% decline in selling prices.
• Third-quarter gross margin was 25%, compared to 32% in the third quarter of 2025, primarily due to lower refrigerant market pricing.
• Nine-month gross margin was 24%, compared to 29% in the first nine months of 2025, reflecting lower pricing and increased operating costs, primarily fuel.
• Third-quarter net income was $2.0 million ($0.05 per diluted share), down from $12.4 million ($0.27 per diluted share) in the third quarter of 2025.
• Nine-month net income was $7.3 million ($0.17 per diluted share), down from $25.3 million ($0.56 per diluted share) in the first nine months of 2025.
• Selling, general, and administrative expenses were $10.8 million for the quarter (up from $8.9 million in 2025) and $32.8 million for the nine months (up from $26.3 million in 2025), reflecting investments in ERP optimization, staffing, and consulting.
• Cash and cash equivalents were $35.3 million at September 30, 2026, compared to $39.5 million at December 31, 2025.
• The company reported being debt-free with no long-term debt obligations listed on the balance sheet.
• Cash provided by operating activities for the nine months ended September 30, 2026, was $4.3 million, compared to $29.4 million in the prior-year period.
• Cash used in financing activities for the nine months was $6.3 million, primarily due to $2.5 million in common stock repurchases and $3.8 million in excise taxes on repurchases.

Guidance and Future Outlook:

• The company maintains full-year 2026 gross margin guidance in the low-to-mid-twenty percent range, consistent with previous targets.
• Management indicated a focus on core refrigerant sales, recovery, and reclamation activities while strategically positioning the company for 2027.
• The company aims to expand service offerings and reduce exposure to refrigerant pricing fluctuations through technical expertise and financial flexibility.

Business Segments and Product Lines:

• Entered into a joint development agreement with Icorium to advance next-generation separation technology for complex, mixed refrigerants.
• Advanced internal efforts to expand operating capacity and capabilities during the quarter.
• Achieved 9% sales volume growth in the nine-month selling season, attributed to leadership position and strong customer relationships.
• Products and services include refrigerant and industrial gas sales, recovery and reclamation services, RefrigerantSide® Services, Chiller Chemistry®, Chill Smart® services, and carbon offset projects.

Market and Competitive Landscape:

• Market conditions featured continued softness in HFC market pricing and muted customer demand due to adequate refrigerant inventories.
• The prior-year period benefited from broad refrigerant price increases amid supply chain constraints related to the EPA-mandated transition to HFO refrigerants.
• The company cites its established market position, longstanding relationships, and technical expertise as competitive advantages.

Risks and Challenges:

• Revenue and profitability are exposed to fluctuations in refrigerant pricing and demand.
• Increased operating costs, specifically fuel costs, impacted gross margins.
• Forward-looking statements highlight risks including regulatory changes, supply chain issues, technological obsolescence, environmental liabilities, and customer concentration.

Management Commentary and Tone:

• CEO Ken Gaglione stated the company continued to execute priorities and advance strategic initiatives to strengthen its competitive position.
• Management emphasized prioritizing profitable sales and cost containment to achieve a 25% gross margin despite the challenging pricing environment.
• The tone reflected confidence in the company's ability to build on its market position as industry conditions evolve, citing a strengthened debt-free balance sheet.

Other Key Points:

• Re-awarded a Defense Logistics Agency (DLA) contract valued at $210 million.
• The company ended the quarter with $35.3 million in cash and is debt-free.
• Share repurchases totaled $2.5 million, with an additional $3.8 million paid in excise taxes on repurchases during the nine-month period.
• Trade accounts receivable increased to $29.8 million at September 30, 2026, from $17.1 million at December 31, 2025.
• Inventory levels were $131.5 million at September 30, 2026, compared to $135.9 million at December 31, 2025.