Navigating Contradictions: Insights from the Latest Earnings Call on Reclaim Volumes, Refrigerant Pricing, and DLA Revenue

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Revenue and Sales Volume:
- Hudson Technologies reported revenue of $55.3 million for Q1 2025, a 15% decrease compared to Q1 2024. Despite a slight improvement in sales volume, the revenue declined due to lower refrigerant market prices.
- The decline in revenue was primarily due to a 40% drop in refrigerant pricing compared to the same period last year.

Pricing Fluctuations and Tariff Impacts:
- HFC pricing, particularly for HFC 410A, which represents about 70% of the total aftermarket demand for HFCs, has been volatile. Pricing at the close of Q1 was still under $6 per pound but increased to over $6 per pound since then.
- The fluctuations in tariffs are creating uncertainty in costs and prices, with higher costs being passed through the distribution chain due to tariffs on both virgin refrigerants and cylinders.

Macroeconomic Environment and Supply Chain Disruptions:
- The macroeconomic environment is volatile, with tariff costs affecting the supply side costs for both virgin refrigerants and cylinders, leading to higher costs being passed through the distribution chain.
- The AMAX Technology Transition Rule is causing supply-side disruptions for next-generation refrigerants, leading to shortages impacting conversions to lower-GWP refrigerants and new system installations.

DLA Contract and Strategic Acquisitions:
- Revenue from the company's DLA contract remained consistent with the historical mid-$30 million annualized run rate, contributing to stability in overall revenue.
- The strategic acquisition of USA Refrigerants strengthened Hudson's capabilities and reach in purchasing recovered refrigerant, leading to increased reclaim volume during Q1.