Hudson Technologies Q2 2025 Earnings Call Transcript

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July 30, 2025

Key Takeaways

  • Positive Sentiment: In Q2, Hudson posted $72.8 million in revenue and achieved a 31% gross margin, driving net income of $10.2 million, or $0.23 per diluted share, up from $9.6 million a year ago.
  • Neutral Sentiment: Sales volumes were slightly lower due to cooler spring weather, offset by higher HFC pricing—peaking at $8 per pound—but Q4 is expected to remain seasonally slow.
  • Positive Sentiment: The reclamation business continues to gain strength with expanded recovery capabilities, positioning Hudson to benefit from the long-term demand tail created by the federal HFC phase-down under the AIM Act.
  • Positive Sentiment: Hudson ended Q2 with $84.3 million of cash and no debt, and repurchased $2.7 million of stock during the quarter ($4.5 million YTD) under its capital allocation strategy.
  • Negative Sentiment: Ongoing EPA regulatory reviews of the AIM Act create uncertainty around future HFC phase-down rules, and Hudson is monitoring policy developments that could affect its reclamation and sales activities.
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Earnings Conference Call
Hudson Technologies Q2 2025
00:00 / 00:00

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Operator

Good day, everyone, and welcome to the Hudson Technologies second quarter two thousand twenty five earnings call. At this time, all participants are on a listen only mode, and we'll open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Jennifer Belladeau of IMS Investor Relations. Ma'am, the floor is yours.

Jennifer Belodeau
Vice President at IMS Investor Relations

Thank you. Good evening, and welcome to our conference call to discuss Hudson Technologies' financial results for the 2025. On the call today are Brian Coleman, president and chief executive officer Brian Bertau, CFO and Kate Houghton, Hudson's Senior Vice President of Sales and Marketing. I'll now take a moment to read the safe harbor statement. During the course of this conference call, we will make certain forward looking statements.

Jennifer Belodeau
Vice President at IMS Investor Relations

All statements that express 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 the industry and of our businesses as we see them today, they guarantees are 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 would ask that you consider and interpret them in that light. We urge you to review Hudson's most recent Form 10 k and other subsequent SEC filings for a a discussion of the principal risks and uncertainties that affect our business and our performance and other factors that could cause our actual results to differ materially.

Jennifer Belodeau
Vice President at IMS Investor Relations

With that out of the way, I'd like to turn the call over to Brian Coleman. Please go ahead, Brian.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

So good evening, and thank you, for joining us. As sometimes happens, we had a slow start to this year's cooling season, which is why we always refer to a nine month selling season rather than looking at it quarter to quarter. Our industry is driven by comfort cooling, so we are obviously weather dependent, but we focus on things that we could control. That focus is centered on ensuring we best serve our customers' needs at all times, which could mean we are buying the recovered refrigerant or selling them refrigerant to meet theirs or their end customers' demand. During the quarter, we did see a lift in nearly all refrigerant pricing, some of which had to do with tariff increases.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

However, we did experience slightly lower sales volume when compared to second quarter of last year. In spite of the external conditions such as a cooler spring weather and supply shortages relative to replacements of lower GDP refrigerants, we posted solid second quarter results with revenues of $72,800,000 and gross margin of 31%. During the quarter, we saw continued strength in our reclamation business as we leveraged our enhanced refrigerant recovery capabilities. We remain focused on expanding our purchasing presence in the marketplace with both new and existing customers as we've historically done. We'll provide a more detailed update around the progress in our reclamation business as the full year wraps up.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

As we've often mentioned, recovered refrigerants returns typically trails refrigerant sales by one quarter each season. DLA orders during the second quarter were in line with our expectations and our anticipated annual order run rate for the DLA contract. We are now entering our tenth year serving the DLA and DoD needs and we believe we will have information on the new contract award results later this year. As I mentioned a moment ago, refrigerant pricing improved in the second quarter showing a sequential increase for the first time in the past two cooling seasons. When we discuss pricing, we're generally focused on the price of HSC410A, which represents about 70% of the total aftermarket demand for HFCs.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

During the course of the second quarter, HSC pricing reached $8 per pound and favorably impacted our gross margin performance. Currently, we're seeing stabilizing prices with some slight declines from the second quarter, which may be associated with the volatility of tariffs. Therefore, with our visibility today and recognizing quarter four is our seasonally slowest quarter, we are maintaining our full year 2025 gross margin target of mid-twenty percent or potentially slightly higher depending on the strength of the third quarter. Looking at the broader regulatory landscape, the elements of the AIM Act including the mandated phase down of HFCs remain in place. That said, it's our understanding that the new leadership at the EPA is continuing their evaluation of certain regulations including the AIM Act.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

We are closely monitoring all the developments and are in direct and frequent communication with the EPA as well as members of Congress. Our unlevered balance sheet at 06/30/2025 reflects 84,300,000.0 in cash and no debt. Our capital allocation strategy remains committed to the three pillars, investing in organic growth, pursuing acquisition opportunities that will strengthen our capabilities, and the opportunistic repurchase of our stock. In keeping with the strategy, we repurchased $2,700,000 of stock during the second quarter. Now I'll introduce Kate Houghton, Senior Vice President of Sales and Marketing, to provide some additional detail around Hudson's market opportunity. Please go ahead, Kate.

Kate Houghton
SVP - Sales & Marketing at Hudson

Thank you, Brian, and good evening, everyone. As Brian mentioned, our second quarter sales volume was impacted by prolonged cooler weather in the Northeast and Midwest, where temperatures didn't meaningfully warm up until mid June. As you know, our sales cycle is typically driven by the first few hot days of any summer when cooling systems are activated and operating issues present themselves, resulting in a service appointment. We are encouraged by the increased sales activity we saw late in the second quarter, which is continuing into the third quarter. Throughout every selling season, we focus on the parts of our business that we can control, which include making sure our customers have the refrigerants they need where and when they need them and promoting recovery and reclamation activities as our industry transitions to lower GWP equipment and refrigerants.

Kate Houghton
SVP - Sales & Marketing at Hudson

Our long standing customer relationships have thrived based on our ability to provide our customers with a full range of the refrigerants to efficiently run their business, combined with their reciprocity in returning to us the recovered refrigerants that fuel our reclamation business. We remain confident that the current phase down of HFC refrigerants represents a significant long term growth opportunity for Hudson as reclaimed HFCs will be increasingly necessary to allow the installed base of units to achieve their full economic life as the supply of virgin HFCs becomes more limited. As a reminder, HFC equipment currently represents the largest portion of the installed base and typically has a lifespan of approximately twenty years. So the demand tail for HFC refrigerants is expected to be long. With our national footprint and robust customer network, we have the ability to drive sales growth for new refrigerants while also serving as a proponent and resource for recovery and reclamation activities as we bridge the supply gaps created by the phase down cycles designed to move the industry to lower GWP refrigerants.

Kate Houghton
SVP - Sales & Marketing at Hudson

Hudson is well positioned to benefit not only from the federally mandated phase down of HFCs imposed by the AIM Act, but also from state by state initiatives. For example, several states have already instituted requirements for the use of reclaim refrigerant in their municipal buildings, and we expect more to follow. Recently, US Green Building Council recognized the role of reclaim refrigerants in the LEED version five program. LEED, which stands for Leadership in Energy and Environmental Design, was established twenty five years ago and is recognized globally as a green building rating system. We are encouraged that reclaim refrigerants is now on the radar of LEED professionals.

Kate Houghton
SVP - Sales & Marketing at Hudson

Importantly, as contractors better understand that they will need reclaim refrigerant to serve their customers as mandates create shortages in virgin supply, they are less likely to vent refrigerant in the process of servicing a unit. Our team here has devoted a great deal of time and effort to training technicians around best field practice recoveries and the benefits of responsible life cycle refrigerant management. We are a frequent presence at HVACR conferences and training events, and we are often invited to address technician training sessions hosted by our customers. During the second quarter, Hudson attended and spoke at Lennox Live and Service Nation events and supported World Refrigeration Day. As our industry continues its ongoing pursuit of lower GWP refrigerants and equipment, Hudson remains a key supplier of next generation refrigerants.

Kate Houghton
SVP - Sales & Marketing at Hudson

At the same time, we play a leadership role promoting recovery and reclamation that will bridge the transition so that our customers are prepared to continue to service the full life cycle of legacy units. Now I'll turn the call over to Brian Verteau, our CFO, to review our second quarter financial results. Go ahead, Brian.

Brian Bertaux
CFO at Hudson

Thank you, Kate, and good evening, everybody. I will now review Hudson's second quarter two thousand twenty five financial results with a comparison of the 2024. Hudson recorded $72,800,000 in revenue, a decrease of 3%. As Brian and Kate noted, refrigerant sales volume was slightly lower than last year due to a late start to the summer weather in the Northeast and Midwest. This was partially offset by an increase in the average selling price of refrigerants.

Brian Bertaux
CFO at Hudson

Gross margin was 31% compared to 30% in the twenty twenty four quarter with the improvement driven by favorable trends in market pricing. Gross profit at $22,800,000 was slightly higher than the twenty twenty four quarter. While gross margin in the second quarter improved due to favorable market pricing trends, we are maintaining our full year 2025 gross margin target of mid-twenty percent with some upside potential as we've seen slight moderation in pricing levels thus far in Q3. We posted $9,300,000 in SG and A expenses, which was slightly higher than last year due to increased staffing. The improvement in gross profit, which was offset by increased SG and A costs, put operating income at $12,700,000 just shy of the $12,800,000 posted last year.

Brian Bertaux
CFO at Hudson

We recorded net interest income of $700,000 compared to net interest expense of $200,000 last year, reflecting the improved liquidity from the company's unlevered balance sheet. Hudson recorded net income of $10,200,000 or $0.23 per diluted share compared to net income of $9,600,000 or $0.20 per diluted share in the twenty twenty four quarter. The company strengthened its unlevered balance sheet ending the quarter with $84,300,000 in cash and no debt. Our capital allocation strategy remains focused on organic and strategic growth as well as opportunistic share repurchases. In keeping with this strategy, we repurchased $2,700,000 of stock early in the second quarter.

Brian Bertaux
CFO at Hudson

We have purchased $4,500,000 in shares thus far in 2025. I will now turn the call back to Brian. Thank you, Brian.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

In the short term, we remain focused on driving strong execution as we move through the balance of the selling season to ensure we are meeting refrigerant and servicing needs of our customers. Long term, we believe our recovery and reclamation capabilities position us well to become a supply source of reclaimed refrigerants as ongoing phase downs limit the supply of newly manufactured refrigerant. Our industry will continue to pursue the development and use of lower GDP refrigerants and Hudson has the expertise, facilities and distribution network to bridge the transition for all types of refrigerants. Operator, we'll now open the call to questions.

Operator

Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star 1 on your phone.

Operator

Thank you. Your first question is coming from Ryan Sigdahl from Craig Hallum. Your line is live.

Ryan Sigdahl
Senior Research Analyst at Craig-Hallum Capital Group LLC

Hey, guys. Nice quarter. Wanna start with, just industry. We've been hearing others talk about repair mix being up in the quarter given supply challenges on the r 54 and and a two l side, both system and gas. Did you guys see any benefit from that via your HFC and kinda aftermarket business?

Ryan Sigdahl
Senior Research Analyst at Craig-Hallum Capital Group LLC

And then did you participate directly in any of that aftermarket sell into the a two l from a new system and sell standpoint given systems were, in some instances, supplied by the aftermarket versus precharged and sold?

Kate Houghton
SVP - Sales & Marketing at Hudson

Sure. Good evening, Ryan. How are doing? We did see we did see repair versus replace, being an element of Q2 activity, leading to relatively strong demand in our core business. We do already participate in the aftermarket sales of, A2L refrigerants, both 454B

Kate Houghton
SVP - Sales & Marketing at Hudson

So we're really covering both the existing existing HFCs and and also already working in the, a two l space in the aftermarket.

Ryan Sigdahl
Senior Research Analyst at Craig-Hallum Capital Group LLC

Kate, are you able to quantify kinda how big the a two l market for Hudson?

Kate Houghton
SVP - Sales & Marketing at Hudson

At at this point, it's relatively small. There is an aftermarket demand because many systems in the installation need a small amount of refrigerant due to the change in charge on OEM units, but it's still small relative to the overall business at this point.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

Yeah. And maybe one thing to add, Ryan, to that question. You're still seeing the sellout of, let's say, for today equipment or other equipment that was manufactured in '24. That sellout is happening pretty rapidly. So possibly although we're not giving guidance on next year, but you could possibly expect to see almost a doubling in volume with a two l's next year because at that point, there should be no four ten a or other high GDP units in the system to be then installed.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

So we're on a growth trajectory of what the future will be for both 454 B and, '32.

Ryan Sigdahl
Senior Research Analyst at Craig-Hallum Capital Group LLC

Maybe just a follow-up question on that, Brian. I guess we were hearing shortages, so there was more kinda aftermarket charges versus precharged systems? I guess, assuming supply chain is more normalized by next year, you still think you can double the a two l and, HFO volumes, even considering, you know, most still come precharged from the factory?

Kate Houghton
SVP - Sales & Marketing at Hudson

So what you're referring to is that their units come precharged to from the factory. However, the charges are supporting less of a line set for installation than some of the, traditional HFC units have. So it's unclear if the OEMs will make significant changes to that going into next year. So at this point, we we do think that doubling of that volume in the aftermarket for installation is is very reasonable.

Ryan Sigdahl
Senior Research Analyst at Craig-Hallum Capital Group LLC

Very good. Moving over to HFCs. What's the current price? I know you said $8. It kinda peaked out at in the quarter, but what's the current price there?

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

It it's it's peaked out around 8. Sometimes it it's a little above. And, when we say 8, we're really talking about 4 today. We've seen a slight retraction in that price, but we're we're pretty much steady in that range.

Ryan Sigdahl
Senior Research Analyst at Craig-Hallum Capital Group LLC

Good. And then can you quantify from a reclamation standpoint whether it's, you know, volume in that you've bought or volume out, which whatever you wanna quantify, but kinda how how much that's grown and and where the reclamation business

Kate Houghton
SVP - Sales & Marketing at Hudson

So we don't report reclamation activity until the end of the year, but we're encouraged by the activity that we have going into Q3.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

Probably at this point, the influence like of the USAA acquisition kind of is difficult to break out any longer because it's fully integrated. So, certainly, the USAA acquisition and the team that came over jump started our growth rate, but we've added new initiatives to support what they were doing and and broaden that across the country. So we're probably not gonna be separating, let's say, USA reclaim activity versus Hudson activity any longer.

Ryan Sigdahl
Senior Research Analyst at Craig-Hallum Capital Group LLC

Very good. Last question for me, just on the HFC kind of sorry, jumping around back to that. But how do you feel about the stockpile kind of current in channel inventory at this point?

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

It's a good question to ask, but it's still a little early for us to answer directly. First off, hopefully, everyone knows, the EPA should be releasing the 2024 inventory data. We think it might be September, October, and that we'll be able to talk about that relative to our third quarter results. We do think that there is some stabilizing, let's say, between the annual allowances and the overall demand, where in the past, we were a little concerned that the allowances may be ahead of demand. But, again, it's really hard to tell because back to some of your early questions and and your good channel checks, there was a lot of, difficulties, forecasting what the April b and 32 demand, particularly for the aftermarket, would be for this year.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

And because a lot of the producers that were involved in those products were adding a significant amount of capacity and finally getting to the point where I think they're catching up and equaling supply and demand, it's hard to say how that's impacting all the other HFCs. But we'll report all that in the third quarter.

Ryan Sigdahl
Senior Research Analyst at Craig-Hallum Capital Group LLC

Very good. Thanks, Brian. Thanks, Kate.

Operator

Thank you. Your next question is coming from Gerry Sweeney from ROTH Capital. Your line is live.

Gerard Sweeney
MD & Senior Research Analyst at Roth Capital Partners, LLC

Good afternoon. Thanks for taking my call.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

Good evening, Jerry.

Gerard Sweeney
MD & Senior Research Analyst at Roth Capital Partners, LLC

Couple quick questions here. Channel checks are channel checks indicated, even though two q started slow, our understanding is volume and demand has been very strong across most refrigerants up until end of the week last week. Just curious if you could give a little bit of detail on volumes. And, I know August 15 is sometimes the flipping point for the heating and cooling season, but any any thoughts on, just the the trend on volumes going forward?

Kate Houghton
SVP - Sales & Marketing at Hudson

Well, I think it's the equivalent of a 105 degrees here in New York, so I'm not sure that August 15 is gonna be the date this year, Jerry.

Gerard Sweeney
MD & Senior Research Analyst at Roth Capital Partners, LLC

But we'll It's good thing.

Kate Houghton
SVP - Sales & Marketing at Hudson

It's a yeah.

Gerard Sweeney
MD & Senior Research Analyst at Roth Capital Partners, LLC

That's a great thing.

Kate Houghton
SVP - Sales & Marketing at Hudson

It's a good thing. 105 and humid. So we'll see what happens

Kate Houghton
SVP - Sales & Marketing at Hudson

Yeah. We've we've seen strong since that mid June, we've seen strong volume and activity, and that's continuing up until now. And so, again, with the heat around the country in a lot of areas, we're continuing to expect to have a very solid Q3.

Gerard Sweeney
MD & Senior Research Analyst at Roth Capital Partners, LLC

Got it. Comment in the prepared remarks about the EPA and the AMAC and discussions. And when the AMAC came about, my understanding was probably bipartisan and and hit a lot of key areas people were looking for. Right? Because it was a new molecule.

Gerard Sweeney
MD & Senior Research Analyst at Roth Capital Partners, LLC

It was patented. It blocked some growth or some refrigerants from China because it's a new molecule. It was a equipment upgrade cycle. Alright. So that's sort of, we'll say, the right side of the aisle like that, the left side like the the phase out of, you know, TWP refrigerants.

Gerard Sweeney
MD & Senior Research Analyst at Roth Capital Partners, LLC

Just curious if there's anything we should be looking further into what's going on with some of those discussions or any changes, but it seemed like it checked a lot of the right boxes the last go around. So any comments on that front?

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

Yeah. So, again, if we all go back in time, president Trump executed the AIM Act in December 2020. There is just a lot of difficult signals to interpret relative to either, what you might hear out of the White House or even what you might hear out of the EPA administrator. Clearly, they are looking at many I I can't say all, but many regulations and looking to dial back regulations that they deem somehow negatively impact the competitiveness, let's say, of US business. Now I'm sure it's a lot broader than that, and there's a lot more complications to that.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

Even recently, you heard the EPA administrator talk about, you know, they no longer are deeming, you know, carbon emissions as hazardous to humans' health. Again, that kind of statement probably doesn't necessarily have a direct impact to the AIM Act and the components to the AIM Act. It probably affects a lot of other areas regarding other emissions and things like that. But no matter what, Hudson and I'd say the rest of the industry is very, very diligent currently with both the EPA and with Congress to reinforce how we got here and why we got here and how the AMAC really was a bipartisan policy and law. And we feel still very strongly that reclamation without a doubt is very important for the long term benefit of American consumers because without reclamation, it's likely you will not be able to attain the full economic life of your unit, which therefore means you're gonna have to accelerate a capital outlay.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

And for, let's say, a residential unit like in your home, you know, you're talking about maybe $12,000, so it's not cheap. So we think this administration and the EPA recognizes the value of reclaim, and we'll continue to support that.

Gerard Sweeney
MD & Senior Research Analyst at Roth Capital Partners, LLC

Got it. Okay. Sticking with reclaim theme here. Obviously, I know you don't wanna get into the volumes or anything like this, so this is more of a qualitative question on that front. But you're out doing a lot of seminars teaching, etcetera etcetera.

Gerard Sweeney
MD & Senior Research Analyst at Roth Capital Partners, LLC

Are you noticing maybe a different tone or tenor with some of the contractors? Do you think more and more people are understanding it or more people are attending? I'm just curious if maybe some of those grassroots type of upswell of maybe where Reclaim is headed.

Kate Houghton
SVP - Sales & Marketing at Hudson

Yeah. It's a great question. When we do do a lot of speaking, we're out, you know, doing webinars and podcasts and conferences, and, you know, it's it's it's a significant part of the education process that we undertake here. I really believe that it's starting to take a hold. Every time we talk to an audience, we still have contractors say, are you kidding me?

Kate Houghton
SVP - Sales & Marketing at Hudson

Are you really gonna pay? Are you sure there aren't fees? But we're starting to, again, reach more and more folks. And once we have a contractor that does a recovery and sends it in and does the return and gets the check, it's just something that they do over and over again. It becomes second nature, becomes part of their business.

Kate Houghton
SVP - Sales & Marketing at Hudson

So, we think there's about 500,000 contractors in the country. We probably haven't talked to half of them yet, but we're well on our way.

Gerard Sweeney
MD & Senior Research Analyst at Roth Capital Partners, LLC

Got it. Okay. I'll jump back in queue. I won't ask too many questions, but thank you.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

Thank you, Jerry.

Kate Houghton
SVP - Sales & Marketing at Hudson

Thanks, Jerry.

Operator

Thank you. Your next question is coming from Josh Nichols from B. Riley. Your line is live.

Josh Nichols
Senior Research Analyst at B.Riley Securities

Yeah. Thanks for taking my question. Great to see the good margin even with what what you said was a little bit slower start to the year. It seems that things ended on a high note, which is good to see, and that's been carrying through. Just for context, I I was going back in some of my notes.

Josh Nichols
Senior Research Analyst at B.Riley Securities

If we look at, like, the back half of next year, you know, of last sorry, of last year of '24, HFC prices were down to, like, $6 a pound. Right? I think and where they are today, if they're right around the $8 pound level, I guess, without going too much in down the rabbit hole in terms of guidance, like, fair to assume that you would expect revenue and gross margin, you know, to be up, three q and four q if pricing maintains where it is through the remainder of the year.

Brian Bertaux
CFO at Hudson

Yeah. Well, as we noted in the in the script, you really can't rely on q four. It's just out of season. So we do expect to have a strong q three. We do see that prices are pulling back a little bit.

Brian Bertaux
CFO at Hudson

So you could expect another strong margin performance in Q3, but Q4 will be soft due to seasonality. So when we look at that and with the, slow start in Q1, it still looks like, the mid 25 margin target for the year with the potential for some upside is still where we feel comfortable.

Josh Nichols
Senior Research Analyst at B.Riley Securities

Fair enough on that. I think we talked about inventory levels. And overall, I guess there's no update you mentioned on the DLA contract. It it's an open contract. And anything you could tell us in terms about the competitive nature or or how many people are going forward or people that historically had this contract or other similar contracts before?

Josh Nichols
Senior Research Analyst at B.Riley Securities

I know you previously mentioned it. You felt that you were in a good position given your your your good delivery schedule over the past.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

Yeah. So let's say the one potential negative about this proposed proposal for, you know, to serve the next years is that it was no longer constructed as a small business set aside, which certainly gave us an advantage when we won this over ten years ago. We don't know how many people have been on it. We would imagine it's somewhere in the five to 10 range. We don't think it's more than 10, but we certainly don't think it's less than five.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

We do have a very high level of success in terms of on time performance and so forth and all the metrics relative to the existing, you know, nine plus years now that we've served them. But what we don't know is who the other bidders are, what types of activities they may or may not have serving the DLA and other contract needs. So we're just always being cautious. We think at this point, they're pretty far down the road, but we don't know frankly when they're going to make a decision. There's not like a shot clock.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

It's going to happen on a particular date and time. But we obviously will make an announcement once we find out who wins the contract.

Josh Nichols
Senior Research Analyst at B.Riley Securities

Appreciate it. Thanks, Brian.

Operator

Thank you. Your next question is coming from Austin Moeller from Your line is live.

Austin Moeller
Director - Equity Research at Canaccord Genuity - Global Capital Markets

Hi. Good afternoon. Just so my my first question here, you mentioned on the call that some of the price increase was impacted by tariffs. So could you just indicate, is that primarily affecting refrigerants that are being imported, which is benefiting prices for for reclaim sourced in The United States? And then if there were any changes to tariffs, what would you expect the impact to be on pricing?

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

Yeah. So it's a great question. And you're right. The the tariff and its impact would be on imported refrigerants, but also imported steel. And so, and then we we would supply for we would, have a supplier of cylinders that's domestic, but we wouldn't always understand or know directly where their steel is coming from.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

So there's at times in what the steel prices are. Also what we would have seen and I'm sure you've all observed is high rates from product that could be coming from China. There were higher rates in product that would be coming from India, which would be tied to refrigerants as well. There's been some element of stability over the last number of months. So we would have had, let's say, higher peaks of particularly those two countries' tariffs that have come down.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

So we're attributing some of the price increase overall and then a little bit of retraction to some of the up and down on the tariff side. But you're also correct in your assumption that because recovered refrigerants is all U. S. Sourced, there is no impact to tariffs and so on down the line. So we generally do get a benefit with price increases on the profitability of recovered gas.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

And so if you put it in the context, just trying to use a very simple example, if the price is $6 maybe on a recovered basis, we could be making close to $3 a pound when we sell a reclaimed pound. But when the price is $8 we could be making maybe $4 So for the same effort and so on down the line, we're getting an extra $1 per unit profit and that incremental dollar generally will fall to the operating line because our SG and A doesn't move up and down as the price of refrigerants moves up and down.

Austin Moeller
Director - Equity Research at Canaccord Genuity - Global Capital Markets

Okay. And then just on the DLA contract, when it's renegotiated, do you expect that the volume of industrial gases and refrigerants that they procure may go up and so there may be a premium on that contract relative to last time you negotiated it?

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

We wouldn't know that, to be honest. We we we would kind of expect so we had I guess, it was two years ago, a great surge in demand on the contract, but it only lasted for about twelve months. The contract, let's say, volumes have been a little higher on the last number of years compared to the early years. I think part of it is about marketing that, we've engaged with the DLA on to try to get more participants buying through the contract versus around the contract. But at the moment, we really don't know a whole lot of what the new contract is exactly gonna look like, but we wouldn't necessarily anticipate higher volumes once the award comes out.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

But we'll give updates on all that once we we hear who gets awarded the contract.

Austin Moeller
Director - Equity Research at Canaccord Genuity - Global Capital Markets

Thanks. That's very helpful. Thanks for the details.

Operator

Thank you. That concludes our q and a session. I'll now hand the conference back to Brian Coleman for closing remarks. Please go ahead.

Brian Coleman
Chairman of the Board, President & CEO at Clear Channel Outdoor

Thank you, operator. I'd like to thank our employees for their continued support in what was really a tough quarter based on the conversation we've had this evening and the dedication to our business and both for our long term shareholders and those that recently joined us for their support as well. We look forward to speaking with you after the third quarter results. Have a great night, everybody.

Operator

Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

Analysts
    • Jennifer Belodeau
      Vice President at IMS Investor Relations
    • Brian Coleman
      Chairman of the Board, President & CEO at Clear Channel Outdoor
    • Kate Houghton
      SVP - Sales & Marketing at Hudson
    • Brian Bertaux
      CFO at Hudson
    • Ryan Sigdahl
      Senior Research Analyst at Craig-Hallum Capital Group LLC
    • Gerard Sweeney
      MD & Senior Research Analyst at Roth Capital Partners, LLC
    • Josh Nichols
      Senior Research Analyst at B.Riley Securities
    • Austin Moeller
      Director - Equity Research at Canaccord Genuity - Global Capital Markets
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