HUDSON TECHNOLOGIES INC /NY

HUDSON TECHNOLOGIES INC /NY: Key Insights on DLA Contract Rescission

Hudson Technologies Inc. (NASDAQ: HDSN) faces a pivotal moment after the U.S. Defense Logistics Agency (DLA) rescinded a major contract award. This summary provides investors with a clear overview of the event, its potential financial implications, and what lies ahead.

1. The Core Event: DLA Contract Rescinded

On January 30, 2026, Hudson Technologies announced that the U.S. Defense Logistics Agency (DLA) rescinded a substantial contract, initially awarded in October 2025. This means the DLA has temporarily withdrawn or canceled the award. Valued at an estimated $150 million over five years, the contract was for refrigerant supply and was set to begin in July 2026. A competitor's "bid protest" challenged the DLA's original decision to award the contract to Hudson, leading to the rescission. Consequently, the DLA is now comprehensively reviewing its bid evaluation process.

2. Timeline of Key Dates

• October 2025: Hudson Technologies was initially awarded the DLA contract.
• January 30, 2026: Hudson Technologies announced the rescission of the contract award.
• July 2026: The rescinded contract was originally scheduled to begin.
• July 2026: Hudson's existing DLA contract is set to expire.

3. Understanding the Bid Protest

A bid protest is a formal challenge an unsuccessful bidder files against a government agency's contract award. Unsuccessful bidders typically file these protests with the Government Accountability Office (GAO) or the U.S. Court of Federal Claims, claiming the procurement process was flawed or unfair. In response, the awarding agency, here the DLA, often takes "corrective action." This can include rescinding the award to re-evaluate bids, amending the solicitation, or even re-opening the bidding process. While common in government contracting, a bid protest introduces significant uncertainty.

4. Financial Impact and Investor Significance

This development introduces considerable financial uncertainty for Hudson Technologies:

• Potential Revenue Loss: The rescinded contract, representing an estimated $30 million in annual revenue over five years, would have contributed significantly, potentially accounting for 10-15% of Hudson's projected annual revenue starting in fiscal year 2026. Losing it would directly impact future revenue and earnings forecasts.
• Continued Short-Term Operations: Importantly, Hudson will continue operating under its existing DLA contract for refrigerant supply until its scheduled expiration in July 2026. While this mitigates immediate operational and revenue loss, it does not address the long-term outlook beyond that date.
• Impact on Growth Strategy: The DLA contract formed a cornerstone of Hudson's anticipated growth and market position in government supply. Its potential loss may require adjustments to the company's strategic plans and capital allocation.
• Stock Volatility: The uncertainty surrounding this substantial contract will likely increase volatility in Hudson's stock price as investors react to the potential financial implications.

5. Management's Perspective and Outlook

Kenneth Gaglione, Hudson's CEO, acknowledged that bid protests are common in government contracting. He expressed confidence in the company's ability to ultimately secure the contract, highlighting Hudson's long-standing relationship with the DLA since 2016 and its proven track record. The company actively engages with the DLA throughout the review process.

6. What Happens Next: The Review Process

The DLA will review the bid evaluation. This process typically assesses the protest's merits and determines if "corrective action" is necessary. While timelines vary, the GAO often resolves protests within 100 calendar days.

• Potential Outcomes:
  • The DLA could reaffirm its original award to Hudson.
  • The DLA could re-evaluate bids and award the contract to the protesting competitor or another bidder.
  • The DLA could amend the solicitation and re-open the bidding process entirely.
• Hudson's Operations: Hudson will continue fulfilling its obligations under the current DLA contract until its expiration in July 2026, providing a buffer period.

7. Key Takeaways for Investors

• Significant Setback, Not Immediate Disaster: While the rescission is a negative development, Hudson's existing DLA contract provides short-term stability until July 2026.
• High Uncertainty: The DLA's review outcome remains unknown, posing a material risk to Hudson's future revenue and profitability. Investors should closely monitor for updates.
• Financial Impact: Note the potential $150 million contract value and its estimated 10-15% impact on projected annual revenue from 2026 onwards. This may lead to revisions in analyst earnings estimates and company guidance.
• Risk of Volatility: Expect fluctuations in Hudson's stock price as the market digests the news and awaits further clarity.
• Due Diligence: Consider the potential long-term impact on Hudson's growth trajectory and competitive position if the contract is permanently lost. Evaluate the company's other revenue streams and strategic initiatives.

So, what's the bottom line? Keep a close eye on official company announcements and SEC filings. The DLA's final decision will be a big deal for Hudson, and staying informed will help you make the best investment choices.