• Full Year Revenue: $237 million, slightly below the revised target of $240 million.
• Full Year Gross Margin: Achieved target of 28%.
• Cash Position: $70 million with no debt as of December 31, 2024.
• Stock Repurchase: $8.1 million of common stock repurchased in 2024.
• Fourth Quarter Revenue: $34.6 million, a 23% decrease compared to the 2023 quarter.
• Fourth Quarter Gross Margin: 17%, down from 31% in the 2023 quarter.
• Fourth Quarter Operating Loss: $3.2 million compared to operating income of $4.7 million in the 2023 quarter.
• Fourth Quarter Net Loss: $2.6 million or $0.06 per share, compared to net income of $3.9 million or $0.09 per share in the 2023 quarter.
• Full Year Net Income: $24.4 million or $0.54 per basic and $0.52 per diluted share, compared to $52.2 million or $1.15 per basic and $1.10 per diluted share in 2023.
• Refrigerant Sales Volume: Increased slightly over 2023, but offset by declining market prices.
• DLA Contract Revenue: $36 million in 2024, slightly ahead of expected normal purchasing levels.
• SG&A Expenses: $33 million in 2024, up from $30.5 million in 2023, including costs from the acquisition of USA Refrigerants.
• Net Interest Income: $500,000 in 2024, a shift from $8.4 million of net interest expense in 2023.
• Reclaim Activity: Increased by 18% in 2024.

• Warning! GuruFocus has detected 3 Warning Signs with LXRX.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hudson Technologies Inc (NASDAQ:HDSN) achieved a full-year gross margin target of 28%, despite challenging market conditions.
• The company strengthened its balance sheet, ending 2024 with $70 million in cash and no debt.
• Hudson Technologies Inc (NASDAQ:HDSN) repurchased $8.1 million of common stock in 2024, demonstrating confidence in its financial position.
• The company has a diverse customer base, allowing it to perform better than the market despite a decline in HFC pricing.
• Hudson Technologies Inc (NASDAQ:HDSN) increased its overall reclaim activity by 18% in 2024, positioning itself well for future demand for reclaimed refrigerants.

Negative Points

• Full-year revenue of $237 million was slightly below the revised target of $240 million.
• HFC pricing in 2024 declined up to 45%, impacting the company's revenue and gross margins.
• The company recorded a net loss of $2.6 million in the fourth quarter of 2024, compared to a net income of $3.9 million in the same quarter of 2023.
• Fourth-quarter revenue decreased by 23% compared to the same period in 2023, primarily due to lower refrigerant market prices.
• Operating income for 2024 was significantly lower at $29.3 million compared to $78.2 million in 2023, reflecting the decline in refrigerant prices and tough comparisons with the previous year.

Q & A Highlights

Q: How much visibility does Hudson Technologies have into the channel, and can they see upstream destocking as it develops? A: Brian Coleman, CEO, explained that they expect inventory totals for 2024 to be lower than 2023 due to a 30% reduction in allowances. However, upstream inventory balances are still significant, and they are cautious about 2025. Prices may change as they approach the cooling season, with more clarity expected by April or May.

Q: With inventories at $96 million, is Hudson Technologies in good shape, or will they continue to purchase aggressively? A: Brian Coleman, CEO, stated that they manage inventory levels to sell within the next season, not carrying a full year's worth. Inventory dollars are coming down due to price rather than volume, and they aim to reload inventory at lower prices. They expect further room to lower inventory dollars based on price alone during the 2025 sales season.

Q: How does the distribution of virgin gas impact Hudson's revenue and business operations? A: Brian Coleman, CEO, noted that HFCs are still dominated by virgin supply, and this is true for Hudson as well. While they can access reclaimed HFCs, the percentage is still in single digits relative to overall HFC demand.

Q: Has there been any impact on the DLA contract from administrative changes, and what is the outlook for the contract renewal? A: Brian Coleman, CEO, mentioned that there are no administrative activities negatively impacting the DLA contract outlook for 2025. The successor contract bid proposals were submitted later than expected, with results likely in the latter part of 2025. They anticipate revenue from the contract to be in the low to mid-30s for 2025.

Q: How might tariffs and trade wars impact Hudson Technologies, particularly regarding refrigerant allocations for 2025? A: Brian Coleman, CEO, explained that large tariffs already exist on Chinese-produced HFC refrigerants. The impact may be more direct on steel tariffs, affecting cylinder costs. They expect to pass these price increases through the channel, as other suppliers are likely to do the same.

Q: How will the transition to new OEM equipment with hybrid refrigerants impact inventory levels and destocking pace in 2025? A: Brian Coleman, CEO, stated that the transition to lower GWP systems is causing market disruption, but the industry should catch up with availability soon. There will be a sell-through of legacy equipment, and supply issues should resolve in the coming months.

Q: What is the outlook for reclaiming new refrigerants, and how does it compare to virgin HFCs? A: Brian Coleman, CEO, noted that while they can technically reclaim replacement refrigerants, it will take time before significant volumes are available. Concerns exist around patent rights for multi-component products. In the near term, they expect large volumes of HFCs to be reclaimed.

Q: How is the demand and pricing for older refrigerants like R-22 evolving? A: Brian Coleman, CEO, indicated that R-22 volumes are declining slowly, as seen in EPA reclaim data. R-22 remains stable in supply and demand, unaffected by the upstream stockpile issues impacting HFCs.

Q: Are there any updates on overseas licensing opportunities for portable distillation equipment? A: Brian Coleman, CEO, mentioned that they have a few existing relationships for licensing equipment and are exploring more opportunities, especially in developing nations. However, there are no recent developments in this area.

Q: Could there be changes to the HFC production cap under the new Congress? A: Brian Coleman, CEO, stated that any changes to allowances would require legislation. Currently, there is no advocacy for changes to the AIM Act, and it is not a priority for Congress. The refrigerant management rule, including reclaim mandates, is not under congressional review.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.