Key Highlights

  • Revenue of USD 59.4 million fell about 20% from USD 74.0 million, with volume down 9% and prices down 17%.
  • Diluted EPS of USD 0.05 compared with USD 0.27 in the prior-year quarter, and net income was USD 2.0 million.
  • Gross margin was 25% versus 32% a year earlier, roughly level with the second quarter of 2026.
  • Cash rose by USD 10 million from June to USD 35.3 million, with no debt outstanding.

Hudson Technologies, Inc. (NASDAQ:HDSN) reported third-quarter 2026 revenue of USD 59.4 million, down from USD 74.0 million a year earlier and well below a consensus estimate of USD 77.96 million. Diluted earnings per share were USD 0.05, below a consensus estimate of USD 0.12. Net income was USD 2.0 million, compared with USD 12.4 million in the third quarter of 2025.

The company attributed the revenue decline to a 9% drop in sales volume and a 17% decrease in selling prices. Muted customer demand and adequate refrigerant inventories held back activity, while the prior-year quarter had benefited from broad price increases tied to the EPA-mandated shift to HFO refrigerants. Chief executive Ken Gaglione said management chose to focus on profitable sales rather than volume, and noted that volume remains up 9% across the first nine months.

Margins, Costs and Strategic Moves

Gross margin of 25% compared with 32% a year earlier, reflecting the lower refrigerant pricing. Selling, general and administrative expenses rose to USD 10.8 million from USD 8.9 million, driven by ERP system optimization and added staff and consulting resources. The company's chief financial officer said ERP expense in the quarter was 50% lower than in the second quarter. Other income also declined, since the prior-year quarter included USD 1.6 million tied to a potential earn-out that did not materialize.

During the quarter Hudson signed a joint development agreement with Icorium on extractive distillation technology for separating mixed refrigerants, which management said would complement its existing distillation systems if commercialized. In August it was re-awarded the DLA contract, valued at USD 210 million, which runs through July 2031 with an option for five more years. The contract contributed USD 11 million of third-quarter revenue.

Outlook and Market Conditions

Management reaffirmed its full-year 2026 gross margin target in the low-to-mid-20% range. For the nine months, revenue was USD 197.9 million versus USD 202.2 million, gross margin was 24% against 29%, and net income was USD 7.3 million, or USD 0.17 per diluted share, versus USD 25.3 million.

The chief executive pointed to EPA data showing U.S. HFC inventory down 3% in 2025 and about 27% since 2022, and said channel inventory continues to weigh on 410A pricing. The chief financial officer said pricing has been stable at second-quarter levels and anticipates 2027 pricing to be about the same as 2026. No shares were repurchased in the quarter, and year-to-date repurchases totaled USD 2.5 million.

Datapoints Worth Following

Four items frame the coming period. Refrigerant pricing is first, since selling prices fell 17% and management anticipates 2027 levels near those of 2026. Gross margin is second, measured against the low-to-mid-20% target after 25% in the quarter. The third is the DLA contract, which produced USD 11 million of revenue in the quarter, alongside the Icorium agreement. The fourth is regulation: California and New York rules requiring certified reclaimed refrigerant in certain automotive uses take effect in January 2027, and the next HFC phase down is scheduled for 2029. Full-year 2026 results are scheduled to be discussed in February.