HUDSON TECHNOLOGIES INC /NY

Previous wording

Revenues for the three-month period ended March 31, 2025 were $55.3 million, a decrease of $10.0 million or 15% from the $65.3 million reported during the comparable 2024 period. The decrease is primarily due to a 20% decrease in selling prices of certain refrigerant sold which was partially offset by an increase in sales volume.

Current wording

Revenues for the three-month period ended June 30, 2025 were $72.8 million, a decrease of $2.5 million or 3% from the $75.3 million reported during the comparable 2024 period. The decrease is primarily due to lower volume of refrigerants sold, as a result of a slower start to the cooling season in the North-East and Mid-West reflecting milder weather through the beginning of June, which was partially offset by an increase in the average sales price of refrigerants sold.

Previous wording

Selling, general and administrative (“SG&A”) expenses for the three-month period ended March 31, 2025 were $8.2 million, an increase of $0.3 million from the $7.9 million reported during the comparable 2024 period due to an increase in personnel costs.

Current wording

Selling, general and administrative (“SG&A”) expenses for the three-month period ended June 30, 2025 were $9.3 million, an increase of $0.3 million from the $9.0 million reported during the comparable 2024 period due to an increase in staffing costs.

Previous wording

Amortization expense for the three-month periods ended March 31, 2025 and 2024 was $0.8 million and $0.7 million, respectively.

Current wording

Amortization expense for the three-month periods ended June 30, 2025 and 2024 was $0.8 million.

Previous wording

Interest expense (income) for the three-month period ended March 31, 2025 was ($0.6) million, compared to the Interest expense of $0.2 million reported during the comparable 2024 period. The Company did not have any interest income in prior period.

Current wording

Net interest income for the three-month period ended June 30, 2025 was $0.7 million, compared to net interest expense of $0.2 million reported during the comparable 2024 period reflecting the Company’s unlevered balance sheet and higher cash position.

Previous wording

The Company’s income tax expense for the three-month period ended March 31, 2025 and March 31, 2024 was $0.9 million and $3.0 million, respectively. The Company’s effective tax rate for the three-month period ended March 31, 2025 and March 31, 2024 was 24.5% and 23.9%, respectively. For the three-month period ended March 31, 2025 and March 31, 2024, income tax expense for federal and state income tax purposes was determined by applying statutory income tax rates to pre-tax income after adjusting for certain items.

Current wording

The income tax expense for the three-month period ended June 30, 2025 was $3.2 million compared to income tax expense of $3.1 million for the three-month period ended June 30, 2024. Income tax expense for federal and state income tax purposes was determined by applying statutory income tax rates to pre-tax income after adjusting for certain items.

Previous wording

The net income for the three-month period ended March 31, 2025 was $2.8 million, a decrease of $6.8 million from the $9.6 million of net income reported during the comparable 2024 period, primarily due to lower revenues, as described above.

Current wording

The net income for the three-month period ended June 30, 2025 was $10.2 million, an increase of $0.6 million from the $9.6 million of net income reported during the comparable 2024 period primarily due to the increased average selling prices for refrigerants sold, partially offset by a decrease in refrigerant sales volume.

Previous wording

Gross profit and gross margin for the three-month period ended March 31, 2025, were $12.1 million and 22% respectively, a decrease of $9.3 million and 11% respectively from the $21.4 million and 33% reported during the comparable 2024 period. The gross margin compression in the 2025 quarter was primarily a result of the lower selling prices of certain refrigerant sold.

Current wording

Gross profit and gross margin for the six-month period ended June 30, 2025, were $34.9 million and 27% respectively, a decrease of $9.2 million and 4% respectively from the $44.0 million and 31% reported during the comparable 2024 period. The gross margin reduction in the 2025 period was primarily a result of the lower average selling prices of refrigerants sold.

Previous wording

At March 31, 2025, the Company had working capital, which represents current assets less current liabilities, of $149.0 million, an increase of $1.3 million from the working capital of $147.7 million at December 31, 2024. The increase in working capital is primarily attributable to a rise in cash.

Current wording

At June 30, 2025, the Company had working capital, which represents current assets less current liabilities, of $157.8 million, an increase of $10.1 million from the working capital of $147.7 million at December 31, 2024. The increase in working capital is primarily attributable to a rise in cash.

Previous wording

Inventories and trade receivables are principal components of current assets. At March 31, 2025, the Company had inventories of $78.3 million, a decrease of $17.9 million from $96.2 million at December 31, 2024. The Company’s ability to sell and replace its inventory on a timely basis and the prices at which it can be sold are subject, among other things, to current market conditions and the nature of supplier or customer arrangements and the Company’s ability to source CFC and HCFC based refrigerants (which are no longer being produced) and HFC refrigerants (virgin production currently in the process of being phased down) and HFO refrigerants.

Current wording

Inventories and trade receivables are principal components of current assets. At June 30, 2025, the Company had inventories of $77.7 million, a decrease of $18.5 million from $96.2 million at December 31, 2024. The Company’s ability to sell and replace its inventory on a timely basis and the prices at which it can be sold are subject, among other things, to current market conditions and the nature of supplier or customer arrangements and the Company’s ability to source CFC and HCFC based refrigerants (which are no longer being produced) and HFC refrigerants (with newly manufactured production currently in the process of being phased down) and HFO refrigerants.

Previous wording

At March 31, 2025, the Company had trade receivables, net of allowance for credit losses, of $27.5 million, an increase of $13.9 million from $13.6 million at December 31, 2024, mainly due to seasonal timing. The Company typically generates its most significant revenue during the second and third quarters of any given year. The Company’s trade receivables are concentrated with various wholesalers, brokers, contractors and end-users within the refrigeration industry that are primarily located in the continental United States. The Company has historically financed its working capital requirements through cash flows from operations, debt, and the issuance of equity securities.

Current wording

At June 30, 2025, the Company had trade receivables, net of allowance for credit losses, of $35.9 million, an increase of $22.3 million from $13.6 million at December 31, 2024, mainly due to seasonal timing. The Company typically generates its most significant revenue during the second and third quarters of any given year. The Company’s trade receivables are concentrated with various wholesalers, brokers, contractors and end-users within the refrigeration industry that are primarily located in the continental United States. The Company has historically financed its working capital requirements through cash flows from operations, debt, and the issuance of equity securities.

Previous wording

Net cash provided by operating activities for the three-month period ended March 31, 2025 was $14.2 million, when compared to net cash used in operating activities of $0.9 million for the comparable 2024 period. The increase is due to timing of accounts receivable, inventories, accounts payable and accrued expenses.

Current wording

Net cash provided by operating activities for the six-month period ended June 30, 2025 was $20.6 million, when compared to net cash provided by operating activities of $40.8 million for the comparable 2024 period. The higher cash flow in the 2024 period was primarily driven by the acquisition of the USA Refrigerants. Another contributory factor was the timing of accounts receivable, inventories, accounts payable and accrued expenses.

Previous wording

Net cash used in investing activities for the three-month period ended March 31, 2025 was $1.4 million compared with net cash used in investing activities of $1.0 million for the comparable 2024 period, mainly due to timing of capital expenditures related to capitalization of the Company’s ERP system.

Current wording

Net cash used in investing activities for the six-month period ended June 30, 2025 was $1.9 million compared with net cash used in investing activities of $22.8 million for the comparable 2024 period, mainly due to recent acquisition of USA Refrigerants as previously discussed and timing of capital expenditures related to capitalization of the Company’s replacement ERP system.

Previous wording

Net cash used in financing activities for the three-month period ended March 31, 2025 was $1.8 million compared with net cash used in financing activities of $0.0 million for the comparable 2024 period. For the period ended March 31, 2025, the Company repurchased 308,588 shares of its common stock, at a cost of $1.8 million.

Current wording

Net cash used in financing activities for the six-month period ended June 30, 2025 was $4.5 million compared with net cash used in financing activities of $0.0 million for the comparable 2024 period. For the period ended June 30, 2025, the Company repurchased 803,653 shares of its common stock, at a cost of $4.5 million.

Previous wording

At March 31, 2025, cash and cash equivalents were $81.0 million, or approximately $10.9 million higher than the $70.1 million of cash and cash equivalents at December 31, 2024.

Current wording

At June 30, 2025, cash and cash equivalents were $84.3 million, or approximately $14.2 million higher than the $70.1 million of cash and cash equivalents at December 31, 2024.

Previous wording

Under the terms of the Amended Wells Fargo Facility, the Borrowers: (i) immediately borrowed $15 million in the form of a “first in last out” term loan (the “FILO Tranche”) and (ii) may borrow from time to time, up to $75 million at any time consisting of revolving loans (the “Revolving Loans”) in a maximum amount up to the lesser of $75 million and a borrowing base that is calculated based on the outstanding amount of the Borrowers’ eligible receivables and eligible inventory, as described in the Amended Wells Fargo Facility. The Amended Wells Fargo Facility also contains a sublimit of $9 million for swing line loans and $2 million for letters of credit. The Company currently has a $0.9 million letter of credit outstanding. The FILO Tranche was repaid in full in July 2023 and may not be reborrowed.

Current wording

Under the terms of the Amended Wells Fargo Facility, the Borrowers: (i) immediately borrowed $15 million in the form of a “first in last out” term loan (the “FILO Tranche”) and (ii) could initially borrow from time to time, up to $75 million at any time consisting of revolving loans (the “Revolving Loans”) in a maximum amount up to the lesser of $75 million and a borrowing base that is calculated based on the outstanding amount of the Borrowers’ eligible receivables and eligible inventory, as described in the Amended Wells Fargo Facility. The Amended Wells Fargo Facility also initially contained a sublimit of $9 million for swing line loans and $2 million for letters of credit. The Company currently has a $0.9 million letter of credit outstanding. The FILO Tranche was repaid in full in July 2023 and may not be reborrowed.

Previous wording

Interest under the Amended Wells Fargo Facility is payable in arrears on the first day of each month. Interest charges with respect to Revolving Loans are computed on the actual principal amount of Revolving Loans outstanding at a rate per annum equal to (A) with respect to Base Rate loans, the sum of (i) a rate per annum equal to the higher of (1) 1.0%, (2) the federal funds rate plus 0.5%, (3) one month term SOFR plus 1.0%, and (4) the prime commercial lending rate of Wells Fargo, plus (ii) between 1.25% and 1.75% depending on average monthly undrawn availability and (B) with respect to SOFR loans, the sum of the applicable SOFR rate plus between 2.36% and 2.86% depending on average quarterly undrawn availability. Interest charges with respect to the FILO Tranche were computed on the actual principal amount of FILO Tranche loans outstanding at a rate per annum equal to (A) with respect to Base Rate FILO Tranche loans, the sum of (i) a rate per annum equal to the higher of (1) 1.0%, (2) the federal funds rate plus 0.5%, (3) one month term SOFR plus 1.0%, and (4) the prime commercial lending rate of Wells Fargo, plus (ii) 6.5% and (B) with respect to SOFR FILO Tranche loans, the sum of the applicable SOFR rate plus 7.50%. The Amended Wells Fargo Facility also includes a monthly unused line fee ranging from 0.35% to 0.75% per annum determined based upon the level of average Revolving Loans outstanding during the immediately preceding month measured against the total Revolving Loans that may be borrowed under the Amended Wells Fargo Facility.

Current wording

Interest under the Amended Wells Fargo Facility is payable in arrears on the first day of each month. Interest charges with respect to Revolving Loans are computed on the actual principal amount of Revolving Loans outstanding at a rate per annum equal to (A) with respect to Base Rate loans, the sum of (i) a rate per annum equal to the higher of (1) 1.0%, (2) the federal funds rate plus 0.5%, (3) one month term SOFR plus 1.0%, and (4) the prime commercial lending rate of Wells Fargo, plus (ii) between 1.25% and 1.75% depending on average monthly undrawn availability and (B) with respect to SOFR loans, the sum of the applicable SOFR rate plus between 2.36% and 2.86% depending on average quarterly undrawn availability. The Amended Wells Fargo Facility also includes a monthly unused line fee ranging from 0.35% to 0.75% per annum determined based upon the level of average Revolving Loans outstanding during the immediately preceding month measured against the total Revolving Loans that may be borrowed under the Amended Wells Fargo Facility.

Previous wording

unfinanced capital expenditures made during such period, to (b) the aggregate amount of (i) interest expense required to be paid (other than interest paid-in-kind, amortization of financing fees, and other non-cash interest expense) during such period, (ii) scheduled principal payments (but excluding principal payments relating to outstanding Revolving Loans under the Amended Wells Fargo Facility), (iii) all net federal, state, and local income taxes required to be paid during such period (provided, that any tax refunds received shall be applied to the period in which the cash outlay for such taxes was made), (iv) all restricted payments paid (as defined in the Amended Wells Fargo Facility) during such period, and (v) to the extent not otherwise deducted from EBITDA for such period, all payments required to be made during such period in respect of any funding deficiency or funding shortfall with respect to any pension plan. The FCCR covenant ceases after the Borrowers have been in compliance therewith for two consecutive months.

Current wording

The Amended Wells Fargo Facility contains a financial covenant requiring the Company to maintain at all times minimum liquidity (defined as availability under the Amended Wells Fargo Facility plus unrestricted cash) of at least $5 million, of which at least $3 million must be derived from availability. The Amended Wells Fargo Facility also contains a springing covenant, which takes effect only upon a failure to maintain undrawn availability of at least $11.25 million or upon an election by the Borrowers to increase the inventory component of the borrowing base, requiring the Company to maintain a Fixed Charge Coverage Ratio (FCCR) of not less than 1.00 to 1.00, as of the end of each trailing period of twelve consecutive months commencing with the month prior to the triggering of the covenant. The FCCR (as defined in the Wells Fargo Facility) is the ratio of (a) EBITDA for such period, minus unfinanced capital expenditures made during such period, to (b) the aggregate amount of (i) interest expense required to be paid (other than interest paid-in-kind, amortization of financing fees, and other non-cash interest expense) during such period, (ii) scheduled principal payments (but excluding principal payments relating to outstanding Revolving Loans under the Amended Wells Fargo Facility), (iii) all net federal, state, and local income taxes required to be paid during such period (provided, that any tax refunds received shall be applied to the period in which the cash outlay for such taxes was made), (iv) all restricted payments paid (as defined in the Amended Wells Fargo Facility) during such period, and (v) to the extent not otherwise deducted from EBITDA for such period, all payments required to be made during such period in respect of any funding deficiency or funding shortfall with respect to any pension plan. The FCCR covenant ceases after the Borrowers have been in compliance therewith for two consecutive months.

Previous wording

For the three-month periods ended March 31, 2025 and 2024, the United States Defense Logistics Agency (the “DLA”) accounted greater than 10% of the Company’s revenue and over 10% of the outstanding accounts receivable at March 31, 2025 and March 31, 2024. Accounts receivable for the DLA totaled $6.2 million and $11.9 million as of March 31, 2025 and March 31, 2024, respectively.

Current wording

For the six-month periods ended June 30, 2025 and 2024, the United States Defense Logistics Agency (the “DLA”) accounted for greater than 10% of the Company’s revenue and over 10% of the outstanding accounts receivable at June 30, 2025 and June 30, 2024. Revenue from the DLA totaled $17.7 million and $18.8 million for the six-month periods ended June 30, 2025 and June 30, 2024. Accounts receivable from the DLA totaled $3.6 million and $3.5 million as of June 30, 2025 and December 31, 2024, respectively.