Hudson Technologies NASDAQ: HDSN reported first-quarter 2026 revenue growth and outlined a series of operational and leadership changes that management said are intended to support longer-term, more diversified growth, even as profitability declined year over year due to product mix and higher expenses tied in part to an enterprise resource planning (ERP) rollout.
First-quarter results show revenue growth, lower profit
CFO Brian Bertaux said Hudson generated revenue of $60.2 million in the first quarter, up 9% from $55.3 million in the prior-year period. CEO Ken Gaglione attributed the revenue increase to “strong sales volume and firming HFC prices,” along with unseasonably warm weather in the Southwestern U.S., uncertainty in global supply lines that drove demand, and what he described as “over-delivery by our sales team.”
Gross profit was $11.8 million, down from $12.1 million a year earlier, and gross margin fell to 20% from 22%. Bertaux said the decline was “primarily due to the mix of refrigerants sold as compared to last year,” noting that the first quarter of 2025 included more higher-priced and higher-margin HFO refrigerants due to contractors topping off newly installed equipment as those systems entered the market.
SG&A expenses rose to $9.5 million from $8.2 million, which Bertaux said was “primarily related to the post-implementation enhancement of our ERP system and continued focus on strategic initiatives.” Operating income declined to $1.5 million from $3.1 million, and net income fell to $300,000, or $0.01 per diluted share, compared with $2.8 million, or $0.06 per diluted share, in the first quarter of 2025.
Bertaux added that income tax expense increased to $1.3 million from $900,000, driven in part by “income tax expenses related to a non-operating item as well as executive stock compensation.”
ERP system launch and organization changes
Gaglione said the first quarter—typically a seasonally slower period for the refrigerants industry—was focused on operational and organizational execution, including the launch of a new ERP system. He said the company had previously expected the transition to constrain first-quarter performance to “the low to mid-single digits” of revenue growth, but results came in stronger than anticipated.
“The ERP system is now integrated and functional,” Gaglione said, adding that Hudson expects to continue optimizing the system throughout the year but does “not expect any major disruptions.” He said the system is already helping deliver “improved and faster management decision-making based on a single source of readily available data.”
During the Q&A, management said ERP-related costs contributed significantly to the year-over-year increase in SG&A. In response to a question about quantifying the impact, management said the ERP work was “a strong contributor, probably half of the increase year-over-year,” and indicated the company expects “the same level of SG&A activity” as it continues optimization.
Hudson also restructured parts of its leadership team. Gaglione said Robert Stoody was promoted to Senior Vice President of Operations, where he will lead efforts to integrate supply chain and plant operations while maintaining responsibility for Hudson’s relationship with the Defense Logistics Agency (DLA). He said the company also expanded the responsibilities of Kirk Reimer, formerly Vice President of Sales, who is now Vice President of Sales and Marketing with a focus on core marketing and strategic growth initiatives, including support for services growth. Gaglione said Hudson added “significant marketing talent” during the quarter.
Pricing, margins, and seasonal demand
Gaglione said traditional HFC pricing in the first quarter was “slightly above $6 a pound,” but he and Bertaux emphasized that the year-over-year comparison was affected by the prior-year quarter’s heavier concentration of HFO refrigerants. Gaglione described the first quarter of 2025 as an “outlier” due to an industry-wide shortage of R-454B, an HFO refrigerant used as a replacement for R-410A in new equipment, which drove elevated demand and inventory building. He said producers later addressed the shortfall.
Asked about the lower gross margin compared with pre-COVID first quarters, management pointed to the tough comparison and reiterated its broader margin expectations. Management said the first and fourth quarters are typically the lowest margin periods and stated it was still “sticking with” overall guidance of “mid-25s% for margin overall,” expecting margin to improve into the second and third quarters. When pressed on whether that meant “25% or better,” management responded, “Yeah. Correct.”
On early-season activity, Gaglione said a “heat dome” in the Southwest arrived earlier than anticipated and led customers to increase inventory. He said conditions had since normalized and that the company was not seeing “large excursions on the outlook.”
In discussing trends entering the second quarter, Gaglione said Hudson expected higher volume year over year in Q2, but less benefit from pricing. He noted that last year’s R-454B shortage lifted multiple refrigerants, including HFOs and HFCs, in the second and third quarters before pricing normalized. As a result, he said Hudson expected pricing to be lower than last year because of that prior-year shortage event.
In response to a question on R-410A, Gaglione said Hudson is “starting to see firming in R-410A pricing” and expects that to continue as the season approaches, while guiding conservatively on where pricing will land. “Generally, I think it’s going to be a little bit consistent with last year’s performance,” he said.
Supply chain uncertainty, regulation, and new refrigerants
Gaglione said uncertainty in global supply chains has affected the refrigerant market, explaining that producers rely on certain feedstocks “coming through the Gulf and other places.” He said Hudson’s market intelligence suggests those costs are rising, and that the company is “starting to see a lift to prices” as increases are passed through distribution channels due to uncertainty around raw material supply “through the Gulf.”
Gaglione also discussed the regulatory environment, saying the American Innovation and Manufacturing (AIM) Act remains “a cornerstone of EPA’s plans to step down HFC use another 30% in 2029.” He said recovered and reclaimed refrigerants are expected to help fill the gap between reduced virgin supply and ongoing demand from legacy systems. He added that state-level efforts to accelerate reductions in high-GWP refrigerants, as well as competing efforts to slow or alter the phase-down schedule, have created uncertainty, but said Hudson is positioned “regardless of the outcome” given its legacy HFC supply and capabilities supporting replacement products.
Hudson also highlighted a licensing agreement related to next-generation refrigerants. In response to an analyst question about the company’s “Solstice licensing deal,” Gaglione said Hudson has a licensing agreement for Chemours products R-448A and R-449A and characterized them as “forward-looking,” primarily for supermarket customers that have converted earlier to those refrigerants. He said the company is “just getting underway,” does not expect significant traction immediately, but has materials in-house, has the capability, and has seen interest from customers in California and other regions where those products are more common. “It’s looking very positive, but nothing to report just yet,” he said.
Balance sheet and capital allocation
Bertaux said Hudson ended March 31, 2026 with $19 million of cash and described the company’s balance sheet as “unlevered” and its working capital position as strong entering the selling season. He also said the company repurchased $2.5 million of common stock during the quarter under its opportunistic buyback program.
Asked about the pace of buybacks versus preserving cash for potential M&A, Gaglione said the company expects the first quarter to be “the low point for the year” and anticipates generating cash flow as the season progresses. He said Hudson plans to continue its capital allocation strategy, including opportunistic repurchases and evaluating strategic opportunities.
About Hudson Technologies NASDAQ: HDSN
Hudson Technologies, Inc is a U.S.-based provider of refrigerant management and sustainability solutions, specializing in the recovery, reclamation and recycling of refrigerant gases. The company's core business centers on collecting used refrigerants—such as CFCs, HCFCs and HFCs—from industrial, commercial and institutional customers, processing them in certified reclamation facilities and returning material that meets industry purity standards.
Headquartered in Purchase, New York, Hudson Technologies operates a network of reclamation centers across the continental United States.
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