10-Q · May 11, 2026
Hudson Technologies reported Q1 2026 results with revenue of $60.2 million, up 9% year-over-year, and EPS of $0.01, below the analyst estimate of $0.05. Increased sales volumes offset a decline in gross margin due to…
Earnings analysis · 10-Q
HDSN earnings analysis
Filed August 7, 2026 · Our reading of the company's report
The latest report
Hudson delivered Q2 revenue of $78.345 million, up 8% year over year and above the provided consensus estimate, but profitability weakened materially: gross margin fell to 26.4% from 31.3%, operating margin fell to 9.4%…
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Hudson delivered Q2 revenue of $78.345 million, up 8% year over year and above the provided consensus estimate, but profitability weakened materially: gross margin fell to 26.4% from 31.3%, operating margin fell to 9.4% from 17.5%, and diluted EPS declined to $0.12 from $0.23. Sequentially, revenue, margins and EPS improved from Q1 2026, but six-month operating cash flow turned negative at $5.956 million and cash declined to $25.600 million. The re-award of the DLA contract through August 4, 2031 is a significant positive, although refrigerant pricing, customer concentration, working-capital needs and the March 2, 2027 credit-facility maturity remain material risks.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Reported figures
- Earnings per share
- $0.12
- Segment
- Single reportable segment: total revenue $78.345 million; product and related sales $76.060 million and RefrigerantSide Services $2.285 million for Q2 2026
What stood out
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Revenue Rebounded on Higher Volume
Q2 revenue increased 8% year over year to $78.345 million from $72.849 million, driven primarily by higher sales volumes despite lower average refrigerant prices. Revenue also rose from $60 million in Q1 2026.
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DLA Contract Re-Awarded
The DLA re-awarded Hudson its previously disputed contract on August 4, 2026. The initial term runs through August 4, 2031, with a five-year option extending the contract through July 31, 2036.
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Sequential Margin Recovery, YoY Pressure
Gross margin improved sequentially to 26.4% from 19.7% in Q1 2026, but declined from 31.3% in Q2 2025. Management attributed the year-over-year pressure to lower average selling prices and higher freight costs.
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No Revolver Borrowings
The company remained debt-free under its revolver at June 30, 2026, with approximately $40 million of borrowing availability and $1.3 million of outstanding letters of credit.
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Inventory Balance Improved
Inventory declined to $128.112 million from $135.923 million at December 31, 2025, while net realizable-value adjustments declined to $4.955 million from $9.958 million.
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Working Capital Increased
The company’s working capital increased to $150.6 million from $146.2 million at year-end 2025, primarily because trade receivables increased to $43.253 million from $17.098 million due to seasonal timing.
What to watch
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Profitability Deteriorated
Q2 operating income fell 42% year over year to $7.398 million from $12.724 million, and operating margin declined to 9.4% from 17.5%, as SG&A increased to $12.436 million from $9.265 million.
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Negative Operating Cash Flow
Net cash used in operating activities was $5.956 million for the six months ended June 30, 2026, versus $20.569 million of operating cash flow in the prior-year period. Cash declined to $25.600 million from $39.456 million at December 31, 2025.
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Refrigerant Price and Supply Risk
Lower refrigerant prices and higher freight costs reduced Q2 gross profit to $20.690 million from $22.811 million. Management warned that declines in refrigerant demand or prices, or an inability to source sufficient supply, could reduce revenue and require inventory write-downs.
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Customer Concentration
The DLA represented more than 10% of six-month revenue, contributing $15.8 million versus $17.7 million in the prior-year period; one additional customer represented 20% of accounts receivable at June 30, 2026.
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Credit Facility Maturity and Covenants
The Wells Fargo facility expires on March 2, 2027. Although the company had $40 million of availability and no balance outstanding at June 30, 2026, future covenant compliance may be affected by weather, regulation, economic conditions and refrigerant pricing.
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EPS and Cost Pressure
Diluted EPS declined to $0.12 from $0.23 year over year, while six-month diluted EPS declined to $0.12 from $0.28. SG&A increased 26% year over year to $21.965 million for the first six months.
Management's outlook
No numeric revenue or EPS guidance was provided in the 10-Q. Management stated it believes working-capital requirements can be met from anticipated operating cash flow and available credit; the DLA contract was re-awarded on August 4, 2026 for an initial term through August 4, 2031, with a five-year extension option through July 31, 2036.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.