Hudson Technologies' Q4 2024: Unraveling Contradictions in Inventory, DLA Revenues, and M&A Strategy

These are the key contradictions discussed in Hudson Technologies' latest 2024Q4 earnings call, specifically including: Inventory Management and Pricing Expectations, DLA Contract Revenue Expectations, and Strategic Focus on M&A:



Revenue and Gross Margin Trends:
- Hudson Technologies reported full year revenue of $237 million, slightly below the revised target of $240 million.
- The company achieved a revised full year gross margin target of 28%.
- The revenue decline was primarily due to decreased pricing for certain refrigerants and lower revenue from the DLA contract.

DLA Contract Impact:
- DLA revenue in 2024 was $36 million, which was slightly ahead of normal purchasing levels.
- The company anticipates DLA purchasing levels to normalize in 2025, as 2024 saw a return to more normalized levels after a surge in 2023.

Inventory and Pricing Dynamics:
- HFC pricing in 2024 declined up to 45% during the sales season, ending the year at just under $6 per pound.
- The company's diverse sales channels allowed it to withstand market price declines better than others, with HFC pricing at the close of 2024 remaining at this level.

Reclamation and Recovery Initiatives:
- Hudson's overall reclaim activity increased by 18% in 2024, reflecting efforts to maximize recovery and reclamation capabilities.
- The acquisition of certain assets from USA Refrigerants in June 2024 further strengthened the company's capabilities in this area.