Q4 2024 Hudson Technologies Inc Earnings Call

March 6, 2025

To the Hudson technologies fourth quarter and full year 2024 earnings call. At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments. After the presentation should you wish to join the queue to ask a question at any time you May press star one on your telephone keypad.

Do you wish to remove yourself from queue, you May press star two.

Speaker Change: Now my pleasure to turn the floor over to Gen. <unk> of IMS Investor Relations gender floor is yours.

Speaker Change: Thank you good evening and welcome to our conference call to discuss Hudson technologies financial results for the fourth quarter and year end 2024 on the call today are Brian Coleman, President and Chief Executive Officer, and Brian Brito, Hudson's CFO I'll now take a moment to read the safe Harbor statement. During the course of this conference call, we will make certain forward looking statements.

Speaker Change: All statements that address expectations opinions or predictions about the future are forward looking statements. Although they reflect our current expectations and are based on our best view of the industry and of our businesses as we see them today. They are not guarantees of future performance. Please understand that these statements involve a number of risks and assumptions and since there's elements can change and <unk>.

Speaker Change: In certain cases are not within our control we would ask that you consider and interpret them in that light.

Speaker Change: Urge you to review Hudson's most recent Form 10-K, and other subsequent SEC filings for a discussion of the principal risks and uncertainties that affect our business and our performance and of the factors that could cause our actual results to differ materially is that another way I'll turn the call over to Brian Coyne Colin. Please go ahead Brian.

Brian: Good evening and thank you for joining us our fourth quarter unfolded largely as expected.

Brian: What was a challenging year.

Brian: As many of you know our fourth quarter has historically been characterized by seasonally slower sales activity compared to our nine month selling season.

Brian: This year was no exception.

Speaker Change: Brian Brito will provide details about our financial results a little later in the call, but at a high level full year revenue.

Speaker Change: Full year revenue of $2 to $37 million was slightly below our revised target of $240 million.

Speaker Change: We achieved our revised full year gross margin target of 28%.

Speaker Change: We further strengthened our unlevered balance sheet as evidenced by our cash position of $70 million and no debt at December 31 2024.

Speaker Change: And after establishing our stock repurchase program during the third quarter, we repurchased a total of $8 1 million of common stock in 2024.

Speaker Change: As we previously discussed our 2024 cooling season was impacted by decreased pricing for certain refrigerants and.

Speaker Change: And our full year results reflect the pricing dynamic.

Operator: Good afternoon, and welcome to the Hudson Technologies fourth quarter and full year 2024 earnings call. At this time, all participants have been placed on a listen only mode, and we will open the floor for your questions and comments after the presentation. Should you wish to join the queue to ask a question at any time you may press star one on your telephone keypad. Should you wish to remove yourself from queue, you may press star two.

Speaker Change: As well as lower revenue from our DLA contract as compared to 2023.

Speaker Change: As we reported HFC pricing in 2024 declined up to 45% throughout the sales season, and we ended the year with no price improvement.

Operator: As many of you know, our fourth quarter has historically been characterized by seasonally slower sales activity compared to our nine-month selling season, and this year was no exception.

As many of you know our fourth quarter has historically been characterized by seasonally slower sales activity compared to our nine month selling season and this year was no exception.

However, our actual sales price decline was not as severe as the market due to our diverse sales channels, which include direct to wholesalers and direct to end customers such as supermarkets chemical plants manufacturing facilities among others.

Brian Bertaux: Brian Bertaux will provide details about our financial results a little later in the call, but at a high level, full year revenue of $237 million was slightly below our revised target of $240 million. we achieved a revised four-year gross margin target of 28 percent. We further strengthen our unlevered balance sheet as evidenced by our cash position of $70 million and no debt at December 31st, 2024. And after establishing our stock repurchase program during the third quarter, we repurchased a total of $8.1 million of common stock in 2024.

Speaker Change: Brian Brito will provide details about our financial results a little later in the call, but at a high level full year revenue.

Jen Belodeau: It's now my pleasure to turn the floor over to Jen Belodeau of IMS Investor Relations. Jen, the floor is yours. Thank you.

Speaker Change: Full year revenue of $2 to $37 million was slightly below our revised target of $240 million.

Speaker Change: HFC pricing at the close of 2024 was just under $6 per pound and remains at this price point as we kick off 2025.

Jen Belodeau: Good evening, and welcome to our conference call to discuss Hudson Technologies' financial results for the fourth quarter and year-end 2024.

Speaker Change: We achieved our revised full year gross margin target of 28%.

Speaker Change: We further strengthened our unlevered balance sheet as evidenced by our cash position of $70 million and no debt at December 31 2024.

Jen Belodeau: On the call today are Brian Coleman, President and Chief Executive Officer, and Brian Bertaux, Hudson's CFO.

Speaker Change: As I mentioned last quarter, when we discuss HFC pricing, we're generally focused on the price of HFC <unk>, which represent represents about 70% of the total aftermarket demand for hfcs.

Jen Belodeau: I'll now take a moment to read the Safe Harbor Statement. During the course of this conference call, we will make certain forward-looking statements. All statements that address expectations, opinions, or predictions about the future are forward-looking statements, Although they reflect our current expectations and are based on our best view of the industry and of our businesses as we see them today, they are not guarantees of future performance. Please understand that these statements involve a number of risks and assumptions, and since those elements can change and in certain cases are not within our control, we would ask that you consider and interpret them in that light.

Speaker Change: And after establishing our stock repurchase program during the third quarter, we repurchased a total of $8 1 million of common stock in 2024.

Speaker Change: For the moment there is no material demand for refrigerants as we've not entered the 2025 cooling season.

Brian Bertaux: As we previously discussed, our 2024 cooling season was impacted by decreased pricing for certain refrigerants, and our full year results reflect that pricing dynamic, as well as lower revenue from our DLA contract as compared to 2023. As we reported, HSC pricing in 2024 declined up to 45% throughout the sales season. And we ended the year with no price improvement. However, our actual sales price decline was not as severe as the market due to our diverse sales channels, which include direct-to-wholesalers and direct-to-end customers, such as supermarkets, chemical plants, manufacturing facilities, among others. HSC pricing at the close of 2024 was just under $6 per pound and remains at this price point as we kick off 2025.

Speaker Change: As we previously discussed our 2024 cooling season was impacted by decreased pricing for certain refrigerants.

Speaker Change: Certainly when we report our first quarter results in early May we'll have a better understanding of any possible supply demand imbalance, but as we've previously noted we have a concern that upstream inventories may still be at a high level.

Speaker Change: And our full year results reflect that pricing dynamic as well as lower revenue from our DLA contract as compared to 2023.

For the moment, we see the 2025 gross margin ranging from the mid to upper Twenty's and certainly on price alone. We will have a difficult comparison to the first quarter of 24 in 2025.

Speaker Change: As we reported HFC pricing in 2024 declined up to 45% throughout the sales season, and we ended the year with no price improvement.

Jen Belodeau: We urge you to review Hudson's most recent Form 10-K and other subsequent SEC filings for discussion of the principal risks and uncertainties that affect our business and our performance and of the factors that could cause our actual results to differ materially.

Speaker Change: However, our actual sales price decline was not as severe as the market due to our diverse sales channels, which include direct to wholesalers and direct to end customers such as supermarkets chemical plants manufacturing facilities among others.

Speaker Change: Ultimately, we will know the 2024 inventory data from the EPA, but that will likely not be available until the third quarter of this year.

Brian Coleman: With that out of the way, I'll turn the call over to Brian Coleman. Please go ahead, Brian. Good evening, and thank you for joining us. Our fourth quarter unfolded largely as expected, closing out what was a challenging year. As many of you know, our fourth quarter has historically been characterized by seasonally slower sales activity compared to our nine-month selling season, and this year was no exception. Brian Bertaux will provide details about our financial results a little later in the call, but at a high level, full year revenue of $237 million was slightly below our revised target of $240 million.

Speaker Change: To give some context around the revenue from the DLA contract during the full year 2024, we recognized $36 million in revenue from the contract, which was slightly ahead of where we expected normal purchasing levels to be.

Speaker Change: HFC pricing at the close of 2024, which just under $6 per pound and remains at this price point as we kick off 2025.

Brian Bertaux: As I mentioned last quarter, when we discuss HFC pricing, we're generally focused on the price of HFC-410A, which represents about 70% of the total aftermarket demand for HFCs.

Speaker Change: As I mentioned last quarter, when we discuss HFC pricing, we're generally focused on the price of HSC <unk>, which represent represents about 70% of the total aftermarket demand for hfcs.

Speaker Change: And we anticipate 2025 will trend to normal purchasing levels.

Speaker Change: As you May remember during 2023, we saw significantly increased purchasing activity of approximately $20 million in revenue through the DLA contract than in any previous year.

Brian Bertaux: For the moment, there is no material demand for refrigerants as we've not entered the 2025 cooling season. Certainly when we report our first quarter results in early May, we'll have a better understanding of any possible supply, demand, and balance. But as we've previously noted, we have a concern that upstream inventories may still be at a high level. For the moment, we see the 2025 gross margin ranging from the mid to upper 20s. And certainly on price alone, we will have a difficult comparison to the first quarter of 24 in 2025.

Speaker Change: For the moment there is no material demand for refrigerants as we've not enter the 2025 cooling season <unk>.

Brian Coleman: we achieved a revised full-year gross margin target of 28%. We further strengthen our unlevered balance sheet as evidenced by our cash position of $70 million and no debt at December 31st, 2024. And after establishing our stock repurchase program during the third quarter, we repurchased a total of 8.1 million of common stock in 2024. As we previously discussed, our 2024 cooling season was impacted by decreased pricing for certain refrigerants. And our full year results reflect that pricing dynamic, as well as lower revenue from our DLA contract as compared to 2023. As we reported, HSE pricing in 2024 declined up to 45% throughout the sales season, and we ended the year with no price improvement.

Speaker Change: And we anticipated 2024 to return to a more normalized DLA purchasing level.

Certainly when we report our first quarter results in early May we'll have a better understanding of any possible supply demand imbalance, but as we've previously noted we have a concern that upstream inventories may still be at a high level.

Speaker Change: As we previously discussed we do not control market pricing for HFC refrigerants.

Speaker Change: But we are fortunate to have a diverse customer base that allows us to perform better than market.

Speaker Change: For the moment, we see the 2025 gross margin ranging from the mid to upper Twenty's and certainly on price alone. We will have a difficult comparison to the first quarter of 24 in 2025.

We will always focus on what we control, namely ensuring that our customers had the right refrigerants, where and when they need them.

And promoting recovery and reclamation activities as our industry transitions to lower GDP equipment and refrigerants.

Brian Bertaux: Ultimately, we will know the 2024 inventory data from the EPA, but that will likely not be available until the third quarter of this year. To give some context around the revenue from the DLA contract, during the full year 2024, we recognized $36 million in revenue from the contract, which was slightly ahead of where we expected normal purchasing levels to be. And we anticipate 2025 will trend to normal purchasing levels. As you may remember, during 2023, we saw a significantly increased purchasing activity of approximately $20 million in revenue through the DLA contract than in any previous year, and we anticipated 2024 to return to a more normalized DLA purchasing level.

Speaker Change: Ultimately, we will know the 2024 inventory data from the EPA, but that will likely not be available until the third quarter of this year.

Our established distribution network, and longstanding supplier and customer relationships position us well to efficiently meet the market demand for all types of refrigerants, including next generation low GDP refrigerants.

Speaker Change: And we remain focused on expanding our customer base and market reach.

Brian Coleman: However, our actual sales price decline was not as severe as the market due to our diverse sales channels, which include direct-to-wholesalers and direct-to-end customers, such as supermarkets, chemical plants, manufacturing facilities, among others. HSC pricing at the close of 2024 was just under $6 per pound and remains at this price point as we kick off 2025. As I mentioned last quarter, when we discuss HFC pricing, we're generally focused on the price of HFC-410A, which represents about 70% of the total aftermarket demand for HFCs. For the moment, there is no material demand for refrigerants as we've not entered the 2025 cooling season.

Speaker Change: Importantly, our long term view is that the current phasedown of HFC refrigerants create a significant opportunity for our reclamation business.

Speaker Change: And we anticipate 2025 will trend to normal purchasing levels.

Speaker Change: As you May remember during 2023, we saw significantly increased purchasing activity of approximately $20 million in revenue through the DLA contract than in any previous year.

Speaker Change: The installed base of HFC equipment will be operable for 20 plus years to come.

Speaker Change: And as the supply of Virgin Hfcs become limited.

Speaker Change: Reclaim hfcs will be needed to fill the anticipated supply demand gap.

Speaker Change: And we anticipated 2024 to return to a more normalized DLA purchasing level.

Speaker Change: Additionally, there have been regulatory changes at both federal and state levels to promote and required the use of reclaim refrigerants.

Brian Bertaux: As we previously discussed, we do not control market pricing for HFC refrigerants. but we are fortunate to have a diverse customer base that allows us to perform better than market. We will always focus on what we control, namely ensuring that our customers have the right refrigerants where and when they need them, and promoting recovery and reclamation activities as our industry transitions to lower GDP equipment and refrigerants. Our established distribution network and longstanding supplier and customer relationships position us well to efficiently meet the market demand for all types of refrigerants, including next generation, low GDP refrigerants.

Speaker Change: As we previously discussed we do not control market pricing for HFC refrigerants.

Speaker Change: But we are fortunate to have a diverse customer base that allows us to perform better than market.

Speaker Change: On the federal level in September the EPA published its final refrigerant management rule, which among other directives mandates the use of reclaim refrigerants for servicing and certain sectors of the market beginning in 2029, and thereby banning the use of newly manufactured or Virgin refrigerants for servicing.

Speaker Change: We will always focus on what we control, namely ensuring that our customers had the right refrigerants, where and when they need them.

Brian Coleman: Certainly, when we report our first quarter results in early May, we'll have a better understanding of any possible supply, demand, and balance, but as we've previously noted, we have a concern that upstream inventories may still be at a high level. For the moment, we see the 2025 gross margin ranging from the mid to upper 20s. And certainly on price alone, we will have a difficult comparison to the first quarter of 24 in 2025. Ultimately, we will know the 2024 inventory data from the EPA, but that will likely not be available until the third quarter of this year.

Speaker Change: And promoting recovery and reclamation activities as our industry transitions to lower GDP equipment and refrigerants.

Speaker Change: Our established distribution network, and longstanding supplier and customer relationships position us well to efficiently meet the market demand for all types of refrigerants, including next generation low GDP refrigerants.

Speaker Change: This is the first time, our industry has seen a federal requirement for the mandatory use of reclaim refrigerants in certain sectors and we believe this represents a strong step forward in the drive toward broader use of reclaim refrigerants.

Brian Bertaux: and we remain focused on expanding our customer base and market reach.

Speaker Change: And we remain focused on expanding our customer base and market reach.

Recently, there has also been promising legislation active among the states led by California, which has implemented laws to prohibit the sale and use of certain newly manufactured high jewelry P. Hfcs.

Brian Bertaux: Importantly, a long-term view is that the current phase-down of HFC refrigerants create a significant opportunity for our reclamation business. The install base of HSE equipment will be operable for 20 plus years to come. And as the supply of virgin HFCs become limited, reclaimed HFCs will be needed to fill the anticipated supply demand gap. Additionally, there have been regulatory changes at both federal and state levels to promote and require the use of reclaimed refrigerants.

Speaker Change: Importantly, our long term view is that the current phasedown of HFC refrigerants create a significant opportunity for our reclamation business.

Speaker Change: And his mandate mandated the use of reclaim refrigerants in their place.

Speaker Change: The installed base of HFC equipment will be operable for 20 plus years to come.

Brian Coleman: To give some context around the revenue from the DLA contract, during the full year 2024, we recognized $36 million in revenue from the contract, which was slightly ahead of where we expected normal purchasing levels to be. And we anticipate 2025 will trend to normal purchasing levels. As you may remember, during 2023, we saw significantly increased purchasing activity of approximately $20 million in revenue through the DLA contract than in any previous year, and we anticipated 2024 to return to a more normalized DLA purchasing level. As we previously discussed, we do not control market pricing for HFC refrigerants.

Speaker Change: At the start of 2025, California also began implementing and mandate for the use of reclaim refrigerants and state government facilities, thereby prohibiting the use of Virgin refrigerants.

And as the supply of Virgin Hfcs become limited reclaimed hfcs will be needed to fill the anticipated supply demand gap.

Additionally, there have been regulatory changes at both federal and state levels to promote and require the use of reclaim refrigerants.

Speaker Change: New York has legislation somewhat similar to California, and Washington State as legislation pending with more states expected to follow.

Brian Bertaux: On the federal level, in September, the EPA published its final refrigerant management rule, which, among other directives, mandates the use of reclaimed refrigerants for servicing in certain sectors of the market beginning in 2029, and thereby banning the use of newly manufactured or virgin refrigerants for servicing. This is the first time our industry has seen a federal requirement for the mandatory use of reclaimed refrigerants in certain sectors, and we believe this represents a strong step forward in the drive toward broader use of reclaimed refrigerants.

Speaker Change: We believe that these mandates create an additional opportunity for contractors to follow the law and not intentionally refrigerants.

Speaker Change: We believe the contractors will recognize have been thing is no longer sustainable if they plan to serve their customer needs associated with these weekly mandates.

Speaker Change: It should be noted that our overall reclaim activity increased by 18% in 2024.

Brian Coleman: But we are fortunate to have a diverse customer base that allows us to perform better than market. We will always focus on what we control, namely ensuring that our customers have the right refrigerants where and when they need them. and promoting recovery and reclamation activities as our industry transitions to lower GDP equipment and refrigerants. Our established distribution network and long-standing supplier and customer relationships position us well to efficiently meet the market demand for all types of refrigerants, including next generation low-GDP refrigerants. and we remain focused on expanding our customer base and market reach. Importantly, a long-term view is that the current phase-down of HFC refrigerants create a significant opportunity for our reclamation business.

Speaker Change: We are intent on maximizing our recovery and reclamation capabilities and our strategic acquisition of certain assets of USA refrigerants in June 2024, strengthen our capabilities in this area.

Brian Bertaux: Recently, there's also been promising legislation active among the states, led by California, which has implemented laws to prohibit the sale and use of certain newly manufactured high GDP HFCs. and has mandated the use of reclaimed refrigerants in their place. At the start of 2025, California also began implementing and mandated for the use of reclaimed refrigerants in state government facilities, thereby prohibiting the use of virgin refrigerant.

Speaker Change: Refrigerant recovery is integral to the reclamation process.

Speaker Change: So our addition of USA and its recovery network combined with our ongoing efforts to promote recovery in the field are strengthening our ability to source recovered refrigerants.

Speaker Change: And his mandate mandated the use of reclaim refrigerants in their place.

Speaker Change: In terms of our efforts in the field Hudson pays for recovered refrigerant and we focused on promoting best practices for recovery of refrigerants during technician training with an emphasis on the existing mandates for the use of reclaim refrigerants.

Brian Bertaux: New York has legislation somewhat similar to California and Washington State has legislation pending with more states expected to follow. We believe that these mandates create an additional opportunity for contractors to follow the law and not intentionally vent refrigerants. We believe that contractors will recognize that vending is no longer sustainable if they plan to serve their customer needs associated with these reclaimed mandates. It should be noted that our overall reclaim activity increased by 18% in 2024. We are intent on maximizing our recovery and reclamation capabilities and our strategic acquisition of certain assets of USA Refrigerants in June of 2024 strengthened our capabilities in this area.

Speaker Change: New York has legislation somewhat similar to California, and Washington State as legislation pending with more states expected to follow.

Speaker Change: We believe that informing technicians about these mandates helps reinforce the message that the practice of venting refrigerants does not make sense for them either financially or commercially.

Brian Coleman: The install base of HSE equipment will be operable for 20 plus years to come. And as the supply of virgin HFCs become limited, reclaimed HFCs will be needed to fill the anticipated supply demand gap. Additionally, there have been regulatory changes at both federal and state levels to promote and require the use of reclaimed refrigerants. On the federal level, in September, the EPA published its final refrigerant management rule, which, among other directives, mandates the use of reclaimed refrigerants for servicing in certain sectors of the market beginning in 2029, and thereby banning the use of newly manufactured or virgin refrigerants for servicing.

Speaker Change: We believe that these mandates create an additional opportunity for contractors to follow the law and not intentionally refrigerants.

Speaker Change: We believe the contractors will recognize that Ben thing is no longer sustainable if they plan to serve their customer needs associated with these weekly mandates.

Speaker Change: We communicate this message by speaking a cooling industry events and by addressing technician training sessions hosted by our customers.

Speaker Change: It should be noted that our overall reclaim activity increased by 18% in 2024.

Hudson: During the fourth quarter Hudson attendant <unk> spoke at service World Expo Green build and <unk> among others.

Hudson: As we move towards the heart of the cooling season for 2025, we believe we are well positioned to grow our role as a leading provider of all types of refrigerants, particularly reclaim refrigerants by ensuring we are positioned to capitalize on refrigerant sales servicing opportunities and the reclamation needs of our customer base.

Brian Bertaux: refrigerant recovery is integral to the reclamation process. So our addition of USA and its recovery network, combined with their ongoing efforts to promote recovery in the field, are strengthening our ability to source recovered refrigerants. In terms of our efforts in the field, Hudson pays for recovered refrigerant, and we focused on promoting best practices for recovery of refrigerants during technician training with an emphasis on the existing mandates for the use of reclaimed refrigerants. We believe that informing technicians about these mandates helps reinforce the message that the practice of venting refrigerants does not make sense for them either financially or commercially.

Speaker Change: Refrigerant recovery is integral to the reclamation process.

Brian Coleman: This is the first time our industry has seen a federal requirement for the mandatory use of reclaimed refrigerants in certain sectors, and we believe this represents a strong step forward in the drive toward broader use of reclaimed refrigerants. Recently, there's also been promising legislation active among the states, led by California, which has implemented laws to prohibit the sale and use of certain newly manufactured high GDP HFCs. and has mandated the use of reclaimed refrigerants in their place. At the start of 2025, California also began implementing and mandated for the use of reclaimed refrigerants in state government facilities, thereby prohibiting the use of virgin refrigerants.

Speaker Change: So our addition of USA in its recovery network combined with our ongoing efforts to promote recovery in the field are strengthening our ability to source recovered refrigerants.

We remain focused on balancing our commitment to driving a smooth transition for our customers through the current refrigerant phasedown, while promoting our industry's continuing evolution towards lower GOP equipment and refrigerants.

Now I'll turn the call over to Brian Brito for the review of our fourth quarter financial results go ahead, Ryan. Thank you, Brian and good evening, everybody I will now review, our fourth quarter and full year 2024 financial results with a comparison to our 22023 result.

Hudson: Hudson reported $34 $6 million in revenue in the 2020 for fourth quarter of.

Brian Bertaux: We communicate this message by speaking at cooling industry events and by addressing technician training sessions hosted by our customers.

Speaker Change: We communicate this message by speaking a cooling industry events and by addressing technician training sessions hosted by our customers.

Hudson: 23% decrease compared to the 2023 quarter.

Hudson: The decrease was primarily related to lower refrigerant market prices and lower revenue from the company's DLA contract.

Brian Coleman: New York has legislation somewhat similar to California, and Washington State has legislation pending, with more states expected to follow. We believe that these mandates create an additional opportunity for contractors to follow the law and not intentionally vent refrigerants. We believe that contractors will recognize that vending is no longer sustainable if they plan to serve their customer needs associated with these reclaimed mandates. It should be noted that our overall reclaim activity increased by 18% in 2024. We are intent on maximizing our recovery and reclamation capabilities and our strategic acquisition of certain assets of USA Refrigerants in June of 2024 strengthened our capabilities in this area.

Brian Bertaux: During the fourth quarter, Hudson attended and or spoke at Service World Expo, Green Build, and ACCA, among others. As we move toward the heart of the cooling season for 2025, we believe we are well positioned to grow our role as a leading provider of all types of refrigerants, particularly reclaimed refrigerants, by ensuring we are positioned to capitalize on refrigerant sales, servicing opportunities and the reclamation needs of our customer base. We remain focused on balancing our commitment to driving a smooth transition for our customers through the current refrigerant phase down, while promoting our industry's continuing evolution towards lower GDP equipment and refrigerants.

Speaker Change: During the fourth quarter Hudson attendant <unk> spoke at service World Expo Green build and <unk> among others.

Hudson: Fourth quarter gross margin was 17% compared to 31% of the 2023 quarter due to lower refrigerant market prices that 2020 for fourth quarter.

Speaker Change: As we move towards the heart of the cooling season for 2025, we believe we are well positioned to grow our role as a leading provider of all types of refrigerants, particularly reclaim refrigerants by ensuring we are positioned to capitalize on refrigerant sales servicing opportunities and the reclamation needs of our customer base.

Hudson: <unk> change in gross margin was consistent with prior years, reflecting lower seasonal sales volume.

Hudson: Our fourth quarter SG&A was $8 million came in lower than the $8 5 million recognized in the 2023 quarter.

Speaker Change: We remain focused on balancing our commitment to driving a smooth transition for our customers through the current refrigerant phasedown, while promoting our industry's continuing evolution towards lower GOP equipment and refrigerants.

Hudson: We recorded an operating loss of $3 2 million in the 2024 quarter compared operating income of $4 7 million in the 2023 quarters.

Hudson: The company recorded a net loss of $2 6 million or a loss of <unk> <unk> per basic and diluted share in the 2024 quarter compared to net income of $3 9 million or.

Brian Bertaux: Now I'll turn the call over to Brian Bertaux for the review of our fourth quarter financial results.

Speaker Change: Now I'll turn the call over to Brian Brito for the review of our fourth quarter financial results go ahead, Ryan. Thank you, Brian and good evening, everybody I will now review, our fourth quarter and full year 2024 financial results with a comparison to our 22023 result.

Brian Coleman: Refrigerant recovery is integral to the reclamation process. So our addition of USA and its recovery network, combined with our ongoing efforts to promote recovery in the field, are strengthening our ability to source recovered refrigerants. In terms of our efforts in the field, Hudson pays for recovery refrigerant, and we focused on promoting best practices for recovery of refrigerants during technician training with an emphasis on the existing mandates for the use of reclaimed refrigerants. We believe that informing technicians about these mandates helps reinforce the message that the practice of venting refrigerants does not make sense for them either financially or commercially.

Brian Bertaux: Go ahead, Brian.

Brian Bertaux: Thank you, Brian, and good evening, everybody. I will now review our fourth quarter and full year 2024 financial results with a comparison to our 2023 results. Hudson recorded $34.6 million in revenue in the 2024 fourth quarter, a 23% decrease compared to the 2023 quarter. The decrease was primarily related to lower refrigerant market prices and lower revenue from the company's DLA contract. Fourth quarter gross margin was 17% compared to 31% in the 2023 quarter due to lower refrigerant market prices. The 2024 fourth quarter sequential change in gross margin was consistent with prior years reflecting lower seasonal sales volume.

Hudson: Or <unk> <unk> per basic and <unk> <unk> per diluted share in the 2023 quarter.

Hudson: Now turning to the full year Hudson recorded $237 $1 million in revenue in 2024, a decrease of 18% compared to 2023.

Speaker Change: Hudson reported $34 $6 million in revenue in the 2020 for fourth quarter of.

23% decrease compared to the 2023 quarter.

Speaker Change: The decrease was primarily related to lower refrigerant market prices and lower revenue from the company's DLA contract.

Hudson: The decrease was primarily related to lower refrigerant market prices and lower revenue from the company's DLA contract.

Speaker Change: Fourth quarter gross margin was 17% compared to 31% of the 2023 quarter due to lower refrigerant market prices that 2020 for fourth quarter.

Hudson: Our refrigerant sales volume increased slightly over 2023. However, this was more than offset by a steady decline throughout the year and market prices for HFC refrigerants.

Speaker Change: Sequential change in gross margin was consistent with prior years, reflecting lower seasonal sales volume.

Hudson: DLA revenue in 2023 was higher than normal due to certain surge purchases of approximately $20 million.

Brian Coleman: We communicate this message by speaking at cooling industry events and by addressing technician training sessions hosted by our customers. During the fourth quarter, Hudson attended and or spoke at Service World Expo, Green Build, and ACCA, among others. As we move toward the heart of the cooling season for 2025, we believe we are well positioned to grow our role as a leading provider of all types of refrigerants, particularly reclaimed refrigerants, by ensuring we are positioned to capitalize on refrigerant sales, servicing opportunities, and the reclamation needs of our customer base. We remain focused on balancing our commitment to driving a smooth transition for our customers through the current refrigerant phase down, while promoting our industry's continuing evolution towards lower GDP equipment and refrigerants.

Brian Bertaux: Our fourth quarter SG&A at $8 million came in lower than the $8.5 million recognized in the 2023 quarter. We recorded an operating loss of $3.2 million in the 2024 quarter, compared to operating income of $4.7 million in the 2023 quarter. The company recorded a net loss of $2.6 million, or a loss of $0.06 per basic and diluted share in the 2024 quarter, compared to net income of $3.9 million, or $0.09 per basic and $0.08 per diluted share in the 2023 quarter.

Speaker Change: Our fourth quarter SG&A to $8 million came in lower than the $8 5 million recognized in the 2023 quarter.

Hudson: The elevated DLA activity in 2023 made for a tough comp for 2024.

Speaker Change: We recorded an operating loss of $3 2 million in the 2024 quarter compared operating income of $4 7 million in the 2023 quarters.

Hudson: 2024, gross margin was 28% compared to 39% 2023, reflecting lower refrigerant market prices throughout 2024, resulting in margin compression.

Speaker Change: The company reported a net loss of $2 6 million or a loss of <unk> <unk> per basic and diluted share in the 2024 quarter compared to net income of $3 $9 million or <unk> <unk> per basic and <unk> <unk> per diluted share in the 2023 quarter.

Hudson: 2024, SG&A was $33 million compared with $35 million in 2023.

Hudson: The increased 2020 for SG&A spend includes approximately $700000 and costs associated.

Brian Bertaux: Now turning to the full year, Hudson recorded $237.1 million in revenue in 2024, a decrease of 18% compared to 2023. The decrease was primarily related to low refrigerant market prices and lower revenue from the company's DLA contract. Our refrigerant sales volume increased lately over 2023. However, this was more than offset by a steady decline throughout the year in market prices for HFC refrigerant. DLA revenue in 2023 was higher than normal due to certain surge purchases of approximately $20 million. The elevated DLE activity in 2023 made for a tough comp for 2024. 2024 gross margin was 28% compared to 39% in 2023, reflecting lower refrigerant market prices throughout 2024, resulting in margin compression.

Speaker Change: Now turning to the full year.

Hudson: Associated with our 2024 position of USA refrigerants and IP related expenses.

Speaker Change: Hudson recorded $237 $1 million in revenue in 2024, a decrease of 18% compared to 2023.

Hudson: In total we spent approximately $1 million in 2024 pursuing strategic opportunities and we expect that to continue this level of activity on an annual basis for the foreseeable future.

Brian Bertaux: Now I'll turn the call over to Brian Bertaux for the review of our fourth quarter financial results. Go ahead, Brian. Thank you, Brian, and good evening, everybody. I will now review our fourth quarter and full year 2024 financial results with a comparison to our 2023 results. Hudson reported $34.6 million in revenue in the 2024 fourth quarter, a 23% decrease compared to the 2023 quarter. The decrease was primarily related to lower refrigerant market prices and lower revenue from the company's DLA contract. Fourth quarter gross margin was 17% compared to 31% in the 2023 quarter due to lower refrigerant market prices.

Speaker Change: The decrease was primarily related to lower refrigerant market prices and lower revenue from the company's DLA contract.

Our refrigerant sales volume increased slightly over 2023. However, this was more than offset by a steady decline throughout the year and market prices for HFC refrigerants.

Hudson: The company recorded operating income of $29 $3 million in 2024 compared to $78 $2 million in 2023.

Speaker Change: DLA revenue in 2023 was higher than normal due to certain search purchases of approximately $20 million.

Hudson: Selecting the previously noted decline in refrigerant prices and tough 2023 DLA comp.

Hudson: We recognized $500000 in net interest income in 2024, which was a significant shift from the $8 4 million of net interest expense recognized in 2023.

Speaker Change: The elevated DLA activity in 2023 made for a tough comp for 2024.

Speaker Change: 2024, gross margin was 28% compared to 39% 2023, reflecting lower refrigerant market prices throughout 2024, resulting in margin compression.

Hudson: Our 2024 earnings before taxes included $2 3 million of nonrecurring income primarily related to a favorable favorable outstanding litigation settlement.

Brian Bertaux: The 2024 fourth quarter sequential change in gross margin was consistent with prior years reflecting lower seasonal sales volume. Our fourth quarter SG&A at $8 million came in lower than the $8.5 million recognized in the 2023 quarter. We recorded an operating loss of $3.2 million in the 2024 quarter, compared to operating income of $4.7 million in the 2023 quarter. The company recorded a net loss of $2.6 million, or a loss of $0.06 per basic and diluted share in the 2024 quarter, compared to net income of $3.9 million, or $0.09 per basic and $0.08 per diluted share in the 2023 quarter.

Brian Bertaux: 2024 SG&A was $33 million compared to $30.5 million in 2023. The increased 2024 SG&A spend includes approximately $700,000 in costs associated with our 2024 acquisition of USA Refrigerants and IT-related expenses. In total, we spent approximately a million dollars in 2024 pursuing strategic opportunities, and we expected to continue this level of activity on an annual basis for the foreseeable future. The company recorded operating income of $29.3 million in 2024, compared to $78.2 million in 2023, reflecting the previously noted decline in refrigerant prices and tough 2023 DLA comp. We recognized $500,000 in net interest income in 2024, which was a significant shift from the $8.4 million of net interest expense recognized in 2023.

Speaker Change: 2024, SG&A was $33 million compared with $35 million in 2023.

Hudson: Hudson recorded net income of $24 4 million.

Hudson: Or <unk> 54 per basic and <unk> 52 per diluted share in 2024 compared to net income of $52 2 million or $1 15 per basic and $1 10 per diluted share in 2023.

Speaker Change: The increased 2020 for SG&A spend includes approximately $700000 in costs associated with our 2024 position of USA refrigerants and IP related expenses.

Speaker Change: In total we spent approximately $1 million in 2024 pursuing strategic opportunities and we expect that to continue this level of activity on an annual basis for the foreseeable future.

Hudson: The company strengthened its unlevered balance sheet, ending 2024 was $70 million in cash and no debt or.

Brian: Our capital allocation strategy remains focused on organic and strategic growth as well as share repurchases. We were pleased with the execution of our capital allocation strategy in 2024, which included the acquisition of USA refrigerants as well as $8 million and share repurchases I'll now turn the call back over to Brian.

Speaker Change: The company recorded operating income of $29 $3 million in 2024 compared to $78 $2 million in 2023.

Brian Bertaux: Now turning to the full year, Hudson recorded $237.1 million in revenue in 2024, a decrease of 18% compared to 2023. The decrease was primarily related to low refrigerant market prices and lower revenue from the company's DLA contract. Our refrigerant sales volume increased lately over 2023. However, this was more than offset by a steady decline throughout the year in market prices for HFC refrigerant. DLA revenue in 2023 was higher than normal due to certain surge purchases of approximately $20 million. The elevated DLA activity in 2023 made for a tough comp for 2024. 2024 gross margin was 28% compared to 39% in 2023, reflecting lower refrigerant market prices throughout 2024, resulting in margin compression.

Speaker Change: Selecting the previously noted decline in refrigerant prices and tough 2023 DLA comp.

Speaker Change: We recognized $500000 in net interest income in 2024, which was a significant shift from the $8 4 million of net interest expense recognized in 2023.

Thank you Brian as we begin 2025 remain committed to our long term outlook that the refrigeration and cooling industry ongoing evolution to lower GDP refrigerants and equipment represents a tremendous growth opportunity for Hudson.

Speaker Change: Our 2024 earnings before taxes included $2 3 million of nonrecurring income primarily related to a favorable favorable outstanding litigation settlement.

Brian: Our progress might move intermittently at times due to factors, we do not control.

Brian: But our management team is very good execution in areas that we do control.

Speaker Change: Hudson recorded net income of $24 4 million.

Brian: With particular emphasis on purchasing more recovery refrigerants, which yield higher gross profits and margins when sold as compared to the distribution of newly manufactured refrigerants.

Speaker Change: <unk> 54 per basic and <unk> 52 per diluted share in 2024 compared to net income of $52 2 million or $1 15 per basic and $1 10 per diluted share in 2023.

Brian: Operator, we'll now open the call to questions.

Brian Bertaux: The company strengthens its unlevered balance sheet ending 2024 with $70 million in cash and no debt. Our capital allocation strategy remains focused on organic and strategic growth, as well as share repurchases. We were pleased with the execution of our capital allocation strategy in 2024, which included the acquisition of USA refrigerants, as well as $8 million in share repurchases.

Speaker Change: Thank you, Florida is now opened for questions if you'd like to join the queue to ask a question at this time. Please press star one on your telephone keypad, we do ask if listening on speakerphone today, how you pick up your handset while asking your question to provide optimal sound quality once again please press.

Speaker Change: The company strengthened its unlevered balance sheet, ending 2024 was $70 million in cash and no debt.

Brian Bertaux: 2024 SG&A was $33 million compared to $30.5 million in 2023. The increased 2024 SG&A spend includes approximately $700,000 in costs associated with our 2024 acquisition of USA Refrigerants and IT-related expenses. In total, we spent approximately a million dollars in 2024 pursuing strategic opportunities, and we expected to continue this level of activity on an annual basis for the foreseeable future. The company recorded operating income of $29.3 million in 2024, compared to $78.2 million in 2023, reflecting the previously noted decline in refrigerant prices and tough 2023 DLA comps. We recognized $500,000 in net interest income in 2024, which was a significant shift from the $8.4 million of net interest expense recognized in 2023.

Brian Brito: Our capital allocation strategy remains focused on organic and strategic growth as well as share repurchases. We were pleased with the execution of our capital allocation strategy in 2024, which included the acquisition of USA refrigerants as well as $8 million and share repurchases I'll now turn the call back over to Brian.

Speaker Change: Star one on your keypad now if you wish to join the queue to ask a question. Please hold a moment, while we poll for questions.

Brian Bertaux: I'll now turn the call back over to Brian. Thank you, Brian.

Speaker Change: And the first question today is coming from Gerry Sweeney from Roth Capital. Jerry Your line is live. Please go ahead.

Speaker Change: Thank you Brian as we begin 2025 remain committed to our long term outlook that the refrigeration and cooling industry ongoing evolution to lower GDP refrigerants and equipment represents a tremendous growth opportunity for Hudson.

Brian Bertaux: As we begin 2025, we remain committed to our long-term outlook that the refrigeration and cooling industry ongoing evolution to lower GDP refrigerants and equipment represents a tremendous growth opportunity for Hudson. Our progress might move intermittently at times due to factors we do not control, but our management team is very good at execution in areas that we do control, with particular emphasis on purchasing more recovered refrigerants which yield higher gross profits and margins when sold as compared to the distribution of newly manufactured refrigerants.

Speaker Change: Yeah.

Speaker Change: Brian one and Brian Thanks for taking my call.

Speaker Change: Which is one of which is too.

Speaker Change: Ill, let you decide alright. Thank you.

Speaker Change: I was going to bring that up.

Speaker Change: Our progress might move intermittently at times due to factors, we do not control.

Speaker Change: Yes.

Speaker Change: Bob.

Speaker Change: We'll go in order of age.

Speaker Change: So.

Speaker Change: But our management team is very good execution in areas that we do control.

Speaker Change: Just curious as to how much visibility you have into the channel and will you be able to see.

Speaker Change: With particular emphasis on purchasing more recovery refrigerants, which yield higher gross profits and margins when sold as compared to the distribution of newly manufactured refrigerants.

Speaker Change: Maybe some of the Destocking upstream as it develops.

Speaker Change: Or if you have some <unk>.

Speaker Change: Ability to talk to some of the client and understand where they are in that process.

Brian Bertaux: Our 2024 earnings before taxes included $2.3 million of non-recurring income primarily related to a favorable outstanding litigation settlement. Hudson recorded net income of $24.4 million, or $0.54 per basic, and $0.52 per diluted share in 2024, compared to net income of $52.2 million, or $1.15 per basic, and $1.10 per diluted share in 2023. The company strengthens its unlevered balance sheet ending 2024 with $70 million in cash and no debt. Our capital allocation strategy remains focused on organic and strategic growth, as well as share repurchases. We were pleased with the execution of our capital allocation strategy in 2024, which included the acquisition of USA Refrigerants, as well as $8 million in share repurchases.

Operator: Operator will now open the call to questions. Thank you. The floor is now open for questions.

Speaker Change: Operator, we'll now open the call to questions.

Speaker Change: Well back to what we suspect we do expect that the inventory totals when reported for 24 will be lower.

Speaker Change: Thank you, Florida is now open for questions if you'd like to join the queue to ask a question at this time. Please press star one on your telephone keypad, we do ask if listening on speakerphone today, how you pick up your handset while asking your question to provide optimal sound quality once again please.

Operator: If you would like to join the queue to ask a question at this time, please press star 1 on your telephone keypad. We do ask, if listening on speakerphone today, that you pick up your handset while asking your question to provide optimal sound quality. Once again, please press star 1 on your keypad now if you wish to join the queue to ask a question. Please hold a moment while we poll for questions.

Speaker Change: 'twenty three and we think a good bit lower because of the 30.

Speaker Change: <unk>, 30% reduction in the allowances in the 24 year compare to the 23 year, believing that the overall demand would have been very similar in 'twenty four to 'twenty three.

Speaker Change: Press Star one on your keypad now if you wish to join the queue to ask a question. Please hold a moment, while we poll for questions.

Speaker Change: Obviously, when the data comes out we will confirm that.

Jerry Sweeney: And the first question today is coming from Jerry Sweeney from Roth Capital. Jerry, your line is live. Please go ahead. Brian 1 and Brian 2, thanks for taking my call. Which is one and which is two? I'm going to let you decide. All right. Thank you. I was going to bring that up. We'll go in order of age. So.

Speaker Change: And the first question today is coming from Gerry Sweeney from Roth Capital. Jerry Your line is live. Please go ahead.

Speaker Change: So we think there's been some decline in the upstream.

Speaker Change: Inventory balances, but it's still we think fairly significant and so we're being cautious about 25 right now.

Brian Brito: Brian one and Brian Thanks for taking my call.

Speaker Change: Which is one of which is two <unk>.

Speaker Change: Setting the stage that obviously, it's still well before the cooling season, but prices haven't changed they may but we probably won't see that until we start to get into April and certainly by early may when we report the first quarter results.

Brian Brito: I'll, let you decide alright. Thank you.

Brian Brito: I was going to bring that up but yes.

Brian Brito: We will go in order of age.

Brian Brito: So.

Brian Coleman: I'll now turn the call back over to Brian. Thank you, Brian. As we begin 2025, remain committed to our long-term outlook that the refrigeration and cooling industry ongoing evolution to lower GDP refrigerants and equipment represents a tremendous growth opportunity for Hudson.

Brian Bertaux: Just curious as to how much visibility you have into the channel and will you be able to see maybe some of the destocking upstream as it develops or if you have some, the ability to talk to some of the clients and understand where they are in that process. Well, you know, back to what we suspect, we do expect that the inventory totals when reported for 24 will be lower than 23. And we think a good bit lower because of the 30 percent reduction in the allowances in the 24 year compared to the 23 year, believing that the overall demand would have been very similar in 24 to 23.

Brian Brito: Just curious as to how much visibility you have into the channel and will you be able to see.

Speaker Change: Got it.

Speaker Change: That in mind.

Brian Brito: Some of the Destocking upstream.

Speaker Change: Looking at your inventory inventories at the close of the year I think there were $96 million you.

Brian Brito: <unk> or if you have some <unk>.

Brian Brito: Ability to talk to some of the client and understand where they are in that process.

Speaker Change: You did mentioned something about inventories at the end I didn't catch all of that but.

Speaker Change: So if this is redundant I apologize but.

Brian Brito: Well back to what we suspect we do expect that the inventory totals when reported for 24 will be lower.

Brian Coleman: Our progress might move intermittently at times due to factors we do not control. But our management team is very good at execution in areas that we do control, with particular emphasis on purchasing more recovered refrigerants, which yield higher gross profits and margins when sold as compared to the distribution of newly manufactured refrigerants.

Speaker Change: Looking at your inventories around $96 million.

Speaker Change: Are you in good shape for that or will you continue to go out and.

Brian Brito: And then 'twenty three and we think a good bit lower because of the.

Speaker Change: Maybe purchase or be more aggressive with gas.

Brian Brito: 30% reduction in the allowances in the 24 year compare to the 23 year, believing that the overall demand with very similar in 'twenty two 'twenty three.

Speaker Change: Or just play it normal.

Speaker Change: Eventually the channel is going to clear and this could be a good opportunity.

Speaker Change: Gain inventory, especially with your balance sheet just wanted to see how you think of that.

Operator: Operator will now open the call to questions. Thank you. The floor is now open for questions.

Brian Bertaux: Obviously, when the data comes out, we'll confirm that. So we think there's been some decline in the upstream inventory balances, but it's still, we think, fairly significant.

Brian Brito: Obviously, when the data comes out we will confirm that.

Speaker Change: Historically, we just manage our inventory levels.

Brian Brito: So we think there's been some decline in the upstream.

Speaker Change: With the intent of being able to sell the inventory within the next season.

Brian Brito: Inventory balances, but it's still we think fairly significant and so we're being cautious about 25, right now and sort of setting the stage that obviously, it's still well before the cooling season, but prices haven't changed they may but we probably won't see that until we start to get into April.

Brian Bertaux: And so we're being cautious about 25 right now and sort of setting the stage that obviously it's still well before the cooling season. The prices haven't changed. They may, but we probably won't see that until we start to get into April and certainly by early May when we report the first quarter results. or just play normal.

Speaker Change: We generally don't carry.

Even a full year's worth of inventory.

Speaker Change: So the dollars you see inventory and healthy inventory dollars are coming down or not necessarily volume.

Speaker Change: Price, particularly of that we're trying to reload the inventory at lower prices.

Brian Brito: And certainly by early May when we report the first quarter results.

Jerry Sweeney: And the first question today is coming from Jerry Sweeney from Roth Capital. Jerry, your line is live. Please go ahead. So Brian 1 and Brian 2, thanks for taking my call. Which is one and which is two? I'm going to let you decide. All right, thank you. I was going to bring that up, but yes. will go in order of age. So.

Speaker Change: Now we saw it probably will reported Q2.

Brian Brito: Got it.

Brian Brito: That in mind.

Brian Brito: Looking at your inventory inventories at the close of the year I think there were $96 million you.

Speaker Change: That our cost basis.

Speaker Change: With stabilizing relative to the sale price, but unfortunately, the sale price decline further from Q2 into Q3.

Brian Brito: You did mentioned something about inventories at the end I didn't catch all of that but.

Brian Brito: So if this is redundant I apologize.

Speaker Change: So we do think going forward there'll be some more room to lower dollars in inventory just on price alone as we.

Speaker Change: Looking at your inventory is around $96 million.

Speaker Change: Are you in good shape for that or will you continue to go out and.

Brian Coleman: Just curious as to how much visibility you have into the channel and will you be able to see maybe some of the de-stocking upstream as it develops or if you have the ability to talk to some of the clients and understand where they are in that process? Well, you know, back to what we suspect, we do expect that the inventory totals, when reported for 24, will be lower than 23. And we think it's a good bit lower because of the 30% reduction in the allowances in the 24 year compared to the 23 year, believing that the overall demand would have been very similar in 24 to 23.

Speaker Change: Go through the 2025 sales season.

Speaker Change: Maybe purchase or be more aggressive with gas.

Speaker Change: I think I got that for Matt to follow up with that later, but I think I got that okay.

Speaker Change: Or just play it normal.

Brian Bertaux: Eventually, the channel is going to clear, and this could be a good opportunity to gain inventory, especially with your balance sheet. Just wanted to see how you think of that. Historically, we just manage our inventory levels with the intent of being able to sell the inventory within the next season. We generally don't carry even a full year's worth of inventory. So the dollars you see in inventory and how the inventory dollars are coming down are not necessarily volume, but price particularly, that we're trying to reload the inventory at lower prices. Now, we thought, probably when we reported Q2, that our cost basis was stabilizing relative to the sale price.

Eventually the channel is going to clear and this could be a good opportunity.

Speaker Change: Yes.

Speaker Change: Got it and.

Speaker Change: Gain inventory, especially with your balance sheet just wanted to see how you think of that.

Speaker Change: Final question I'm not sure if you'll answer this but I'll throw it out there obviously reclaim as part of the business distribution is I think a virgin gas still remains a portion of your business.

Speaker Change: Historically, we just manage our inventory levels.

Speaker Change: With the intent of being able to sell the inventory within the next season.

Speaker Change: Just curious on access to gas on that front.

Speaker Change: What percentage of revenue or of that or how important does that play into.

Speaker Change: We generally don't carry.

Speaker Change: Even a full year's worth of inventory.

Speaker Change: Just general revenue in <unk>.

Speaker Change: So the dollars you see inventory and how the inventory dollars are coming down or not necessarily volume.

Speaker Change: Operations and leveraging assets.

Speaker Change: Yes.

Speaker Change: <unk> still are dominated by Virgin supply and then therefore that would be true for Hudson certainly because we're reclaimer.

Speaker Change: Price, particularly of that we're trying to reload the inventory at lower prices.

Brian Coleman: Obviously, when the data comes out, we'll confirm that. So we think there's been some decline in the upstream inventory balances, but it's still, we think, fairly significant. And so we're being cautious about 25 right now, and sort of setting the stage that obviously it's still well before the cooling season, but prices haven't changed. They may, but we probably won't see that until we start to get into April and certainly by early May when we report the first quarter results. got it.

Speaker Change: Now we saw it probably will reported Q2.

Speaker Change: Enable to axis reclaimed hfcs are percentage might be different than others, but still.

Speaker Change: At our cost basis.

Speaker Change: With stabilizing relative to the sale price, but unfortunately, the sale price decline further from Q2 into Q3. So we do think going forward there'll be some more room to lower dollars in inventory just on price alone as we.

Speaker Change: <unk> are single digits relative to the overall HFC demand.

Brian Bertaux: But unfortunately, the sale price declined further from Q2 into Q3. So we do think going forward, there'll be some more room to lower dollars in inventory just on price alone as we go through the 2025 sales season. I think I got that. I may have to follow up with that later, but I think I got that. Okay. Got it.

Speaker Change: Got it Okay got it I'll jump back in queue I appreciate it.

Speaker Change: Thank you.

Speaker Change: Thank you. Your next question is coming from Ryan <unk>.

Go through the 2025 sale season.

Brian Coleman: You know, with that in mind, and looking at your inventory at Michael Nichols, Ryan Sigdahl, Michael Nichols, Brian Coleman, Austin Moeller, Nat Krishnamurti, Jennifer Belodeau, Brian Bertaux, Hudson Technologies Inc maybe purchase or be more aggressive with gas. or just play normal. Eventually, the channel's gonna clear and this could be a good opportunity to gain inventory, especially with your balance sheet. Just wanted to see how you think of that. Historically, we just manage our inventory levels with the intent of being able to sell the inventory within the next season. We generally don't carry even a full year's worth of inventory.

Speaker Change: From Craig Hallum.

Speaker Change: I think I got that for Matt to follow up with that later, but I think I got that okay.

Speaker Change: Ryan Your line is live please go ahead.

Speaker Change: Hey, good afternoon, Brian Brian.

Speaker Change: Yes.

Speaker Change: Rob.

Brian Bertaux: And final question. I'm not sure if you'll answer this, but I'll throw it out there. You know, obviously, reclaim is part of the business. Distribution is, I think, of virgin gas still remains a portion of your business.

Speaker Change: Got it and.

Speaker Change: I want to start with.

Speaker Change: The DLA contract. So one have you seen any impact from whether it be Trump and kind of the administration change the dose cuts that are happening.

Speaker Change: And then as you look at kind of a new contract that's up for renewal and re bad right now if anything changed from a timing standpoint still expected decision. This summer and then as far as the bid process goes I guess anything significant that's changed from your expectation of what Hudson's margins can be with that renewal.

Brian Bertaux: Just curious on access to gas on that front and, you know, what percentage of revenue or of that or how important does that play into, you know, just general revenue and business operations and leveraging assets? Yeah, I mean, HFCs still are dominated by virgin supply. And then therefore, that would be true for Hudson. Now, certainly because we're a reclaimer, and able to access reclaimed HFCs, our percentage might be different than others. But still, HFCs are single digits relative to the overall HFC demand. Got it. Okay, got it.

Just curious on access to gas on that front.

Speaker Change: What percentage of revenue or of that or how important does that play into.

Speaker Change: Just general revenue in.

Speaker Change: Operations and leveraging assets.

Speaker Change: Yes, I mean, HFC still are dominated by Virgin supply and then therefore that would be true for Hudson certainly because we're reclaimer.

Speaker Change: Back to the contract there is several hundred line items and they are all really consumable line items.

Speaker Change: Unable to access reclaimed hfcs are percentage might be different than others, but still <unk>.

Speaker Change: No.

Speaker Change: There is no guarantee demand relative to the contract that's why it's difficult to estimate with an annual revenue might be but again, we think it's going to be in that low to mid <unk> for 2025, we don't see any.

Speaker Change: Hfcs are single digits relative to the overall HFC demand.

Brian Coleman: So the dollars you see in inventory and how the inventory dollars are coming down are not necessarily volume, but price, particularly, that we're trying to reload the inventory at lower prices. Now, we thought probably we'll report a Q2. that our cost basis was stabilizing relative to the sale price, but unfortunately, the sale price declined further from Q2 into Q3. So we do think going forward, there'll be some more room to lower dollars in inventory just on price alone as we go through the 2025 sale season. Okay, guys, I may have to follow. I think I got it.

Speaker Change: Got it Okay got it I'll jump back in queue.

Jerry Sweeney: I'll jump back in queue. I appreciate it. Thank you.

Speaker Change: Administrative activities thats going to negatively or at the moment positively improve that outlook relative to what we think.

Speaker Change: Appreciate it.

Speaker Change: Thank you.

Speaker Change: Thank you. Your next question is coming from Brian <unk>.

Ryan Sigdahl: Your next question is coming from Ryan Sigdahl from Craig Hallam. Ryan, your line is live. Please go ahead. Hey, good afternoon, Brian, Brian. Why don't we start with... DLA contract.

Speaker Change: We will achieve in 2025 related to the contract.

Speaker Change: From Craig Hallum.

Ian: Ian Your line is live please go ahead.

Speaker Change: As it relates to the successor.

Speaker Change: Hey, good afternoon, Brian Brian.

Speaker Change: Successor contract.

Ian: Bob.

Speaker Change: The bid proposals went in but went in later than the original timeline.

Ian: I want to start with.

Speaker Change: The DLA contract. So one have you seen any impact from whether it be Trump and kind of the administration change the dose cuts that are happening.

Brian Bertaux: So one, have you seen any impact from whether it be Trump and kind of the administration change, the doge cuts that are happening? And then as you look at kind of the new contract that's up for renewal and rebid right now, anything changed from a timing standpoint, still expect a decision in the summer. And then as far as the bid process goes, I guess anything significant that's changed from your expectation of what Hudson's margins can be with that renewal? So back to the contract, there's several hundred line items, and they're all really consumable line items. We don't, there is no guaranteed demand relative to the contract.

Speaker Change: So we think it would be more likely the back half in the later part of 2025, when we hear the results of that process and who will be awarded with the next call.

Speaker Change: And then as you look at kind of a new contract that's up for renewal and re bad right now if anything changed from a timing standpoint still expect a decision. This summer and then as far as the bid process goes I guess anything significant that's changed from your expectation of what Hudson's margins can be with that renewal.

Speaker Change: Contract.

Speaker Change: And then just as you think about tariffs trade Wars do you think that will have any impact are you seeing any impacts from usage of allocations for 2025 potentially quite modes.

Brian Coleman: Got it.

Brian Coleman: And Final question. I'm not sure if you'll answer this, but I'll throw it out there. You know, obviously, reclaim is part of the business. Distribution is, I think, of virgin gas still remains a portion of your business. Just curious on access to gas on that front and, you know, what percentage of revenue or of that, or how important does that play into, you know, just general revenue and business operations and leveraging assets? Yeah, I mean, HFCs still are dominated by virgin supply. And then therefore, that would be true for Hudson. Now, certainly because we're a reclaimer, and able to access reclaimed HFCs, our percentage might be different than others, but still, HFCs are single digits relative to the overall HFC demand.

Speaker Change: Back to the contract.

Speaker Change: Several hundred line items and they are all really consumable line items.

Early end of the year or maybe even pushing them right.

Speaker Change: Well.

No.

Speaker Change: As it relates to refrigerants, we already had very very large tariffs on the Chinese produced.

Speaker Change: There is no guarantee demand relative to the contract that's why it's difficult to estimate what an annual revenue might be but again, we think it's going to be in that low to mid <unk> for 2025, we don't see any.

Brian Bertaux: That's why it's difficult to estimate what an annual revenue might be but again we think it's going to be in that low to mid 30s for 2025. We don't see any, you know, administrative activities that's going to negatively or at the moment positively improve that outlook relative to what we think we'll achieve in 2025 related to the contract.

Speaker Change: HFC refrigerants and pretty much almost every class whether they be individual components or blended products.

Speaker Change: The tire range, probably from 200% to 285% already.

Speaker Change: Administrative activities thats going to negatively.

Speaker Change: Where I think for the moment, we're going to see more of an impact direct impact would be on some steel tariffs and if you think about some of the tires that are being put in place on steel that could impact that.

Speaker Change: At the moment positively improve that outlook relative to what we think.

Speaker Change: We will achieve in 2025 related to the contract.

Brian Bertaux: As it relates to the successor contract, the bid proposals went in but went in later than the original timeline. So we think it would be more likely the back half and the later part of 2025, when we hear the results of that process and who will be awarded with the next contract.

Speaker Change: As it relates to the <unk>.

Speaker Change: Successor contract.

Speaker Change: The bid proposals went in but went in later than the original timeline.

Speaker Change: Cost of cylinders.

And we have a large reusable cylinder fleet. So we don't need to really buy a lot of reusable cylinders just to kind of fill in as end of life comes out of that fleet, but as it relates to disposable cylinders, which go towards the smaller size.

Brian Coleman: Got it. Okay, got it. I'll jump back in queue. I appreciate it. Well, thank you. Thank you.

Speaker Change: So we think it would be more likely the back half at a later part of 2025, when we hear the results of that process and who will be awarded with the next <unk>.

Speaker Change: Contract.

Brian Bertaux: And then just as you think about tariffs, trade wars, do you think that'll have any impact? Are you seeing any impact from usage of allocations for 2025 of potentially pulling those? early into the year or maybe even pushing them late. Well, as it relates to refrigerants, we already had very, very large tariffs on the Chinese produced HFC refrigerants and pretty much almost every class, whether they be individual components or blended products. The tariffs range probably from 200 to like 285% already. Where I think for the moment, we're going to see more of an impact, a direct impact would be on some steel tariffs.

Speaker Change: And then just as you think about tariffs trade Wars do you think that'll have any impact are you seeing any impacts from usage of allocations for 2025 potentially point boats.

Speaker Change: Refrigerants.

Mainly residential like commercial we think we're going to see some price increases on the cylinders and we're expecting to be able to pass those price increases through the channel because we would expect most of the other suppliers of refrigerants to that channel would likely do the same.

Brian Coleman: So one, have you seen any impact from whether it be Trump and kind of the administration change, the doge cuts that are happening? And then as you look at kind of the new contract that's up for renewal and rebid right now, anything change from a timing standpoint, still expect a decision in the summer. And then as far as the bid process goes, I guess anything significant that's changed from your expectation of what Hudson's margins can be with that renewal? So back to the contract, there's several hundred line items, and they're all really consumable line items. We don't, there is no guaranteed demand relative to the contract.

Speaker Change: Early end of the year or maybe even pushing them.

Speaker Change: Well.

Speaker Change: As it relates to refrigerants, we already had very very large tariffs on the Chinese produced.

Speaker Change: Great. Thanks, guys. Good luck.

Josh Nichols: Thank you. Your next question is coming from Josh Nichols from B Riley Josh. Your line is live. Please go ahead.

Speaker Change: HFC refrigerants and pretty much almost every class whether they be individual components or blended products.

Speaker Change: The tire range, probably from 200% to 285% already.

Josh Nichols: Yes. Thanks for taking my question, just kind of curious with the switchover.

Speaker Change: Where I think for the moment, we're going to see more of an impact a direct impact would be on some steel tariffs and if you think about some of the tires that are being put in place of steel that could impact that.

Josh Nichols: Who we are.

Josh Nichols: This hybrid refrigerants.

Josh Nichols: Okay.

Brian Bertaux: And if you think about some of the tariffs that are being put in place on steel, that could impact the cost of cylinders. And we have a large reusable cylinder fleet, so we don't need to really buy a lot of reusable cylinders just to kind of fill in as end of light comes out of that fleet. But as it relates to disposable cylinders, which go towards the smaller sized refrigerants for mainly residential light commercial, we think we're going to see some price increases on the cylinders. And we're expecting to be able to pass those price increases through the channel, because we would expect most of the other suppliers of refrigerants to that channel would likely do the same.

Josh Nichols: Still early days I mean, some other peers have said that you may not see the impact until late <unk> or whatnot, but I'm just curious your thoughts on how that may impact your inventory levels are beginning to like the pace of stocking for 2025.

Brian Coleman: That's why it's difficult to estimate what an annual revenue might be but again we think it's going to be in that low to mid 30s for 2025. We don't see any, you know, administrative activities that's going to negatively or at the moment positively improve that outlook relative to what we think we'll achieve in 2025 related to the contract.

Speaker Change: Cost of cylinders.

Speaker Change: And we have a large reusable cylinder fleet. So we don't need to really buy a lot of reusable cylinders just to kind of fill in as end of life comes out of that fleet, but as it relates to disposable cylinders, which go towards the smaller size.

Josh Nichols: So the newer equipment and the equipment transition rules kicking in this year.

Josh Nichols: The products that would've been stockpile really are related to the HFC legacy systems.

Brian Coleman: As it relates to the successor contract, the bid proposals went in, but went in later than the original timeline. So we think it would be more likely the back half and the later part of 2025 when we hear the results of that process and who will be awarded with the next contract.

Speaker Change: Refrigerants.

Speaker Change: Mainly residential like commercial we think we're going to see some price increases on the cylinders and we're expecting to be able to pass those price increases through the channel because we would expect most of the other suppliers of refrigerants to that channel would likely do the same.

So products associated with either the components to <unk> or <unk> today as an example.

Josh Nichols: Right now there is market disruption as it relates to the transitioning.

Josh Nichols: Two the lower GDP systems, mainly.

Josh Nichols: Mainly.

Ryan Sigdahl: Great. Thanks, guys. Good luck. Thank you.

Speaker Change: Great. Thanks, guys. Good luck.

<unk> to current demand and supply, but likely as it relates with any transition you run into that in the early days and then quickly the industry catches up with availability on both the equipment and on the refrigerant side. So there are some chunky newness right now as the lower GOP.

Speaker Change: Thank you. Your next question is coming from Josh Nichols from B Riley Josh. Your line is live. Please go ahead.

Josh Nichols: Your next question is coming from Josh Nichols from B Reilly. Josh, your line is live. Please go ahead. Yeah, thanks for taking my question. Just kind of curious with like the switchover for new OEM equipment to this hybrid refrigerant. Just still early days. I mean, some other peers have said that you may not see the impact until like 2Q or whatnot.

Brian Coleman: And then just as you think about tariffs, trade wars, do you think that'll have any impact? Are you seeing any impact from usage of allocations for 2025 of potentially pulling those? early into the year or maybe even pushing them late. Well, as it relates to refrigerants, we already had very, very large tariffs on the Chinese produced HFC refrigerants and pretty much almost every class, whether they be individual components or blended products. The tariffs range probably from 200 to like 285% already. Where I think for the moment, we're going to see more of an impact, a direct impact would be on some steel tariffs.

Josh Nichols: Yes. Thanks for taking my question just kind of curious the switchover.

Speaker Change: Okay.

Josh Nichols: Equipment is being launched there was definitely sell through of the legacy equipment. So we'll likely see a lot of four today units being sold in the 25 year and installed in a 25 year and all of these.

This hybrid refrigerants.

Speaker Change: Still early days I mean, some other peers have said that we may not see the impact until late <unk> or whatnot, but I'm just curious your thoughts on how that may impact inventory levels or potentially like the pace of stocking for 2025.

Brian Bertaux: But I'm just curious your thoughts on how that may impact inventory levels or potentially like the pace of stocking for 2025. So the newer equipment and the equipment transition rule is kicking in this year. The products that would have been stockpiled really are related to the HSC legacy system. So, products associated with either the components to 410A or 410A, as an example. Right now, there is market disruption as it relates to the transitioning to the lower GDP systems, mainly related to current demand and supply, but likely, as it relates with any transition, you run into that in the early days, and then quickly, the industry catches up with availability on both the equipment and on the refrigerant side.

Josh Nichols: Different supply issues on the transition of the lower GDP equipment should Cleveland sales up over the next few months.

Speaker Change: So the newer equipment and the equipment transition rules kicking in this year.

Josh Nichols: Thank you and then Brian I know that.

Josh Nichols: Primary of course focused on reclamation, but you have to do also sell so Mike historically like Virgin HFC is lower margin granted when Mike.

Speaker Change: The products that would've been stockpile really are related to the HFC legacy systems.

Brian Coleman: And if you think about some of the tariffs that are being put in place on steel, that could impact the cost of cylinders. And we have a large reusable cylinder fleet, so we don't need to really buy a lot of reusable cylinders just to kind of fill in as end of life comes out of that fleet. But as it relates to disposable cylinders, which go towards the smaller sized refrigerants for mainly residential like commercial, we think we're going to see some price increases on the cylinders. And we're expecting to be able to pass those price increases through the channel, because we would expect most of the other suppliers of refrigerants to that channel would likely do the same.

Speaker Change: So products associated with either of the components to <unk> or <unk> today as an example.

Josh Nichols: The reclamation side of the business I think it's like 20%.

Speaker Change: Right now there is market disruption as it relates to the transitioning.

Josh Nichols: Jim.

Speaker Change: Something that you guys.

Speaker Change: I guess would still be doing much of or would you be able to do that for the new refrigerants as well.

Speaker Change: Two the lower GDP systems, mainly.

Speaker Change: Mainly.

Speaker Change: <unk> to current demand and supply, but likely as it relates with any transition you run into that in the early days and then quickly the industry catches up with availability on both the equipment and on the refrigerant side. So there are some chunky newness right now as the lower GOP.

Speaker Change: Pricing for the newer refrigerants going into OEM equipment.

Speaker Change: Is presumed to be higher than <unk>.

Speaker Change: <unk> given the transition thats going on or we do not really be impacted by that.

Brian Bertaux: So, there is some, you know, chunkiness right now, as the lower GDP equipment is being launched.

Speaker Change: Well, we definitely technically can be claim.

Speaker Change: Placement refrigerants.

Speaker Change: Equipment is being launched there was definitely sell through of the legacy equipment. So we will likely see a lot of four today units being sold in the 25 year and installed in a 25 year and all these.

Brian Bertaux: There is definitely sell-through of the legacy equipment, so we'll likely see a lot of 410A units being sold in the 25 year, and installed in the 25 year, and all these different supply issues on the transition of the lower GDP equipment should clean themselves up in the next few months.

Speaker Change: It probably though will be a while before you start to see any material amounts of that because they have to be installed and then problems have to occur and so forth.

Ryan Sigdahl: Great. Thanks, guys. Good luck. Thank you.

Speaker Change: The.

Josh Nichols: Your next question is coming from Josh Nichols from BRiley. Josh, your line is live. Please go ahead. Yeah, thanks for taking my question. Just kind of curious with like the switch over for new OEM equipment to this hybrid refrigerant. And just still early days. I mean, some other peers have said that you may not see the impact until like 2Q or whatnot.

Speaker Change: Conserve could be about what reclaim activity. We can do our volumes is around some of these replacement low GOP refrigerants are under patent and because they are multi component.

Speaker Change: Different supply issues on the transition of the lower GDP equipment should clean themselves up in the next few months.

Brian Bertaux: Thank you. And then Brian, I know that, you know, primary, of course, focused on reclamation, but you have, you do also sell some like historically, like virgin HFCs, lower margin branded than like, the reclamation side of the business. I think it's like 20% for virgin. Is that something that you guys I guess would still be doing much of, or would you be able to do that for the new refrigerants as well? Because the pricing for the newer refrigerants going into OEM equipment is presumed to be higher than HFCs, given the transition that's going on, or would you not really be impacted by that?

Brian Brito: Thank you and then Brian I know that.

Speaker Change: Products, we want to make sure that we're not upsetting any relationship to any patent rights and things like that so those are things that will get worked out over the next number of years as these replacement systems get installed and eventually start to run into problems, but for the near term.

Brian Brito: Primary of course focused on reclamation, but you have to do also sell so Mike historically like Virgin HFC is lower margin granted for Mike.

Brian Coleman: But I'm just curious your thoughts on how that may impact inventory levels or potentially like the pace of the stocking for 2025. So the newer equipment and the equipment transition rule is kicking in this year. The products that would have been stockpiled really are related to the HSC legacy system. So, products associated with either the components to 410A or 410A, as an example. Right now, there is market disruption as it relates to the transitioning to the lower GDP systems, mainly related to current demand and supply, but likely, as it relates with any transition, you run into that in the early days, and then quickly the industry catches up with availability on both the equipment and on the refrigerant side.

Brian Brito: The reclamation side of the business I think it looks like 20%.

Speaker Change: We're pretty much going to see large volumes of hfc's coming back.

Brian Brito: Jim.

Thank you guys.

Brian Brito: <unk> still be doing much of or would you be able to do that for the new refrigerants as well.

Speaker Change: We are.

Speaker Change: <unk> discussed this evening strategies to grow.

Speaker Change: Our overall volume of recovered Hfcs, and we expect to continue to do that in 2025 and beyond.

Brian Brito: The newer refrigerants going to OEM equipment.

Brian Brito: Presume to be higher than hfcs, given the transition that's going on or we do not really be impacted by that.

Speaker Change: Thanks, and then last question for me I mean, we've talked a lot about hfcs, but just some of the older stuff like R 22.

Brian Bertaux: Well, we definitely technically can reclaim replacement refrigerants. It probably, though, will be a while before you start to see any material amounts of that because they have to be installed and then problems have to occur and so forth. Where the concern could be about what reclaim activity we could do or volumes is around some of these replacement low GFP refrigerants are under patent. And because they are multi component products, we want to make sure that, you know, we're not upsetting any relationship to any patent rights and things like that. So those are things that will get worked out over the next number of years as these replacement systems get installed and eventually start to run into problems. But for the near term, we're pretty much going to see large volumes of HFCs coming back.

Brian Brito: Well, we definitely technically can be claim replacement refrigerants.

Speaker Change: As that continues to Asia, where we're seeing any major shifts in terms of demand or pricing on that front or is that continue to hold pretty steady at a much higher price relatively steady volumes.

Brian Brito: It probably though will be a while before you start to see any material amounts of that because they have to be installed and then problems have to occur and so forth.

Brian Brito: Where the.

Brian Brito: Conserve could be about what reclaim activity. We can do our volumes is around some of these replacement low GOP refrigerants are under patent and because they are multi component.

Speaker Change: Well the volumes will decline slowly over time and have been declining and you can see that.

Speaker Change: Really as reported through the EPA reclaimed data so youll see that our 'twenty to reclaim volumes on an annual basis continued that downward slope.

Brian Coleman: So, there is some, you know, chunkiness right now, as the lower GDP equipment is being launched. There is definitely sell-through of the legacy equipment.

Brian Brito: Products, we want to make sure that we're not upsetting any relationship to any patent rights and things like that so those are things that will get worked out over the next number of years as these replacement systems gets installed and eventually start to run into problems, but for the near term.

Speaker Change: And that downward slope is likely going to tie into how demand is declining as well so for the most part of our 22 using R 22.

Brian Coleman: So, we'll likely see a lot of 410A units being sold in the 25-year and installed in the 25-year, and all these different supply issues on the transition of the lower GDP equipment should clean themselves up in the next few months. Thank you. And then, Brian, I know that, you know, primary, of course, focused on reclamation, but you have, you do also sell some like historically like virgin HFCs, lower margin branded than like, the reclamation side of the business. I think it's like 20% for virgin. Is that something that you guys I guess would still be doing much of, or would you be able to do that for the new refrigerants as well?

Speaker Change: Reclaim proxy.

Speaker Change: Our 22.

Speaker Change: Stable and has been pretty stable relative to supply and demand and really not influenced in the way that hfcs have been because hfcs are the class of refrigerants, where this upstream stockpile.

Brian Brito: We're pretty much going to see large volumes of hfc's coming back.

Brian Bertaux: We're, you know, discussed this evening strategies to grow our overall volume of recovered HFCs. And we expect to continue to do that in 2025 and beyond.

Brian Brito: We are.

Brian Brito: <unk> discussed this evening strategies to grow.

Our overall volume of recovered Hfcs, and we expect to continue to do that in 2025 and beyond.

Speaker Change: Understood. Thanks, Brian.

Brian Bertaux: Thanks.

Brian Bertaux: And then last question for me, I mean, we talked a lot about HFCs, but just some of the older stuff like R22. As that continues to age out, have you seen any major shifts in terms of demand or pricing on that front? Or does that continue to hold pretty steady at a much higher price with relatively steady volume? Well, the volumes will decline slowly over time and have been declining. And you can see that really as reported through the EPA reclaimed data. So you'll see that R22 reclaimed volumes on an annual basis continued that downward slope.

Speaker Change: Thanks, and then last question for me I mean, we talked a lot about hfcs, but just some of the older stuff like R 22.

Speaker Change: Thank you. Your next question is coming from Austin Moeller from Canaccord Austin. Your line is live. Please go ahead.

Speaker Change: As that continues to age out we'll be seeing any major shifts in terms of demand or pricing on that front or does that continue to hold pretty steady at a much higher price relatively steady volumes.

Austin Moeller: Hi, good afternoon.

Austin Moeller: So just my first question do you have any updates on potential overseas licensing opportunities of portable distillation equipment.

Brian Coleman: Because the pricing for the newer refrigerants going into OEM equipment is presumed to be higher than HFCs, given the transition that's going on, or would you not really be impacted by that? Well, we definitely technically can reclaim replacement refrigerants. It probably, though, will be a while before you start to see any material amounts of that because they have to be installed and then problems have to occur and so forth. Where the concern could be about what reclaim activity we could do or volumes is around some of these replacement low GFP refrigerants are under patent. And because they are multi component products, we want to make sure that, you know, we're not upsetting any relationship to any patent rights and things like that.

Austin Moeller: Yeah.

Speaker Change: I'm sorry are you asking the question about Hudson licensing equipment, yes.

Speaker Change: Well the volumes will decline slowly over time and have been declining and you could see that.

Austin Moeller: Yes.

Speaker Change: Really as reported through the EPA reclaimed data so youll see that our 'twenty to reclaim volumes on an annual basis continued that downward slope.

Speaker Change: Rather of customers overseas being able to use your licensed equipment.

Speaker Change: So we have over the years, a handful of relationships, where we've worked with organizations that already have an HVAC.

Brian Bertaux: And that downward slope is likely going to tie into how demand is declining as well. So for the most part, R22 using R22 as the reclaimed proxy, R22 is stable and has been pretty stable relative to supply and demand and really not influenced in the way the HFCs have been, because HFCs are the class of refrigerants where there's an upstream stockpile. Understood.

Speaker Change: And that downward slope is likely going to tie into how demand is declining as well so for the most part of our 22 using R 22.

Speaker Change: Business in infrastructure and have licensed our equipment and our proprietary.

Speaker Change: Reclaim proxy.

Speaker Change: Our 22.

Speaker Change: Distillation knowhow.

Speaker Change: Stable and has been pretty stable relative to supply and demand and really not influenced in the way. The hfcs have been because hfcs are the class of refrigerants, where this upstream stockpile.

Speaker Change: We're definitely looking to do more of that.

Speaker Change: We're spending a lot more time.

Speaker Change: At the meeting of the parties for the Montreal Protocol.

Speaker Change: <unk> two developing nations trying to understand how we might help there, but almost always we're going to look for a partner that already has an established business that could make sense for us to try and license our technology, but nothing current.

Brian Coleman: So those are things that will get worked out over the next number of years as these replacement systems get installed and eventually start to run into problems. But for the near term, we're pretty much going to see large volumes of HFCs coming back. We're, you know, discussed this evening strategies to grow our overall volume of recovered HFCs, and we expect to continue to do that in 2025 and beyond.

Brian Brito: Understood. Thanks, Brian.

Brian Bertaux: Thanks, Brian.

Brian Bertaux: Thank you.

Speaker Change: Thank you. Your next question is coming from Austin Moeller from Canaccord Austin. Your line is live. Please go ahead.

Austin Moeller: Your next question is coming from Austin Moeller from Canaccord. Austin, your line is live. Please go ahead. Hi, good afternoon. So just my first question, do you have any updates on potential overseas licensing opportunities of portable distillation equipment? I'm sorry, are you asking the question about Hudson licensing equipment? Yes, or rather of customers overseas being able to use your licensed equipment. So we have over the years a handful of relationships where we've worked with organizations that already have an HVAC business and infrastructure and have licensed our equipment and our proprietary distillation know-how. We're definitely looking to do more of that.

Speaker Change: In the recent months.

Okay and just a second question do you think it's possible there could be changes to the production caf for Hfcs allowed under the new Congress or do you think that the.

Hi, good afternoon.

Speaker Change: So just my first question do you have any updates on potential overseas licensing opportunities of portable distillation equipment.

Speaker Change: Chemical manufacturers are more focused on transitioning to <unk> in Congress likely won't change anything.

Speaker Change: I'm sorry are you asking the question about Hudson licensing equipment, yes.

Brian Coleman: Thanks. And then last question for me, I mean, we talked a lot about HFCs, but just some of the older stuff like R22. As that continues to age out, have you seen any major shifts in terms of demand or pricing on that front? Or does that continue to hold pretty steady at a much higher price with relatively steady volume? Well, the volumes will decline slowly over time and have been declining. And you can see that really as reported through the EPA reclaimed data. So you'll see that R22 reclaimed volumes on an annual basis continued that downward slope.

Speaker Change: Yes.

Speaker Change: Well, we focus mainly not so much the production, but the consumption cap.

Speaker Change: Rather of customers overseas being able to use your licensed equipment.

Speaker Change: And it's really that first fill it up for sale inside the United States borders relative to the allowance system.

Speaker Change: So we have over the years, a handful of relationships, where we've worked with organizations that already have an HVAC.

Speaker Change: But if there was to be a change to the allowances that would have to be legislated Congress would have to.

Speaker Change: Business in infrastructure and have licensed our equipment and our proprietary.

Construct the Bill and then it would have to pass.

Speaker Change: Distillation knowhow.

Speaker Change: The house and Senate and then obviously executed by the President.

Speaker Change: We're definitely looking to do more of that.

Brian Bertaux: We're spending a lot more time at the meeting of the parties for the Montreal Protocol, listening to developing nations, trying to understand how we might help there.

Speaker Change: There is no to my knowledge, there is no industry members or anyone advocating for any changes to the existing and Ams.

Speaker Change: We're spending a lot more time.

Speaker Change: At the meeting of the parties for the Montreal protocol listening to developing nations trying to understand how we might help there, but almost always we're going to look for a partner that already has an established business that could make sense for us to try and license our technology, but nothing current.

Brian Coleman: And that downward slope is likely going to tie into how demand is declining as well. So for the most part, R22 using R22 as the reclaimed proxy, R22 is stable and has been pretty stable relative to supply and demand and really not influenced in the way the HFCs have been, because HFCs are the class of refrigerants where there's an upstream stockpile. Understood. Thanks, Brian. Thank you.

Speaker Change: There was a congressional review process.

Brian Bertaux: But almost always we're going to look for a partner that already has an established business that could make sense for us to try and license our technology, but nothing current in the recent months. Okay, and just a second question, do you think it's possible there could be changes to the production cap for HFCs allowed under the new Congress? Or do you think that the chemical manufacturers are more focused on transitioning to HFOs and Congress likely won't change anything? Well, we focus mainly not so much the production, but the consumption cap. And it's really that first fill or that first sale inside the United States borders relative to the allowance system.

Speaker Change: On the refrigerant management rule that was issued by the EPA in September of this year, which in part included the mandates for the use of reclaim.

Speaker Change: In the recent months.

Speaker Change: It doesn't look like that congressional review of that particular rulemaking is a priority for the current Congress.

Speaker Change: Okay and just a second question do you think it's possible there could be changes to the production caf for Hfcs allowed under the new Congress or do you think that the.

When we looked at the list from the House majority leader relative to the congressional review.

Speaker Change: Chemical manufacturers are more focused on transitioning to <unk> in Congress likely won't change anything.

Projects or process.

Speaker Change: Anything associated with the <unk> didn't appear to be a priority for them.

Speaker Change: Well, we focus mainly not so much the production, but the consumption cap.

Speaker Change: Great. That's very helpful. Thanks for the insight.

Speaker Change: And it's really that first fill it up for sale inside the United States borders relative to the allowance system.

Speaker Change: Thank you.

Brian Bertaux: But if if there was to be a change to the allowances, that would have to be legislated. Congress would have to, you know, construct a bill and then it would have to pass, you know, the House and Senate and then obviously executed by the president. But there's no, to my knowledge, there's no industry members or anyone advocating for any changes to the existing AM Act. There was a congressional review process on the refrigerant management rule that was issued by the EPA in September of this year, which in part included the mandates for the use of reclaim.

Speaker Change: This does conclude today's question and answer session I would now like to turn the floor back to management for closing remarks.

Speaker Change: But if there was to be a change to the allowances that would have to be legislated Congress would have to.

Speaker Change: Thank you operator, I'd like to thank our employees for their continued support and dedication to our business.

Speaker Change: Construct the Bill and then it would have to pass.

Speaker Change: The house and Senate and then obviously executed by the President.

Speaker Change: And both our longtime shareholders and those that recently joined us for their support.

Speaker Change: There is no to my knowledge, there is no industry members or anyone advocating for any changes to the existing and Ams.

Speaker Change: We look forward to speaking with you after the first quarter results have a good night everybody.

Speaker Change: There was a congressional review process.

Speaker Change: Thank you. This does conclude today's conference call. You may disconnect. Your lines at this time and have a wonderful day. Thank you for your participation.

Speaker Change: On the refrigerant management rule that was issued by the EPA in September of this year, which in part included the mandates for the use of reclaim.

Austin Moeller: It doesn't look like that congressional review of that particular rulemaking is a priority for the current Congress. When we looked at the list from the House majority leader relative to the congressional review projects or process, anything associated with the AM Act didn't appear to be a priority for them. Great. That's very helpful. Thanks for the insight. Thank you.

Speaker Change: It doesn't look like that congressional review of that particular rulemaking is a priority for the current Congress.

Brian Coleman: We're spending a lot more time at the meeting of the parties for the Montreal Protocol, listening to developing nations, trying to understand how we might help there. But almost always we're going to look for a partner that already has an established business that could make sense for us to try and license our technology. But nothing current in the recent months.

When we looked at the list from the <unk>.

Speaker Change: House majority leader relative to the congressional review.

Speaker Change: Projects or process.

Speaker Change: Anything associated with the <unk> didn't appear to be a priority for them.

Speaker Change: Great. That's very helpful. Thanks for the insight.

Brian Coleman: Okay, and just a second question. Do you think it's possible there could be changes to the production cap for HFCs allowed under the new Congress? Or do you think that the chemical manufacturers are more focused on transitioning to HFOs and Congress likely won't change anything? Well, we focus mainly not so much the production, but the consumption cap. And it's really that first fill or that first sale inside the United States borders relative to the allowance system. But if if there was to be a change to the allowances, that would have to be legislated. Congress would have to, you know, construct a bill and then it would have to pass, you know, the House and Senate and then obviously executed by the president.

Speaker Change: Thank you.

Operator: This does conclude today's question and answer session.

Speaker Change: This does conclude today's question and answer session I would now like to turn the floor back to management for closing remarks.

Brian Bertaux: I would now like to turn the floor back to management for closing remarks. Thank you, operator. I'd like to thank our employees for their continued support and dedication to our business. and both our long-time shareholders and those that recently joined us for their support. We look forward to speaking with you after the first quarter results.

Speaker Change: Thank you operator, I'd like to thank our employees for their continued support and dedication to our business.

Speaker Change: And both our longtime shareholders and those that recently joined us for their support.

Speaker Change: We look forward to speaking with you after the first quarter results have a good night everybody.

Operator: Have a good night, everybody. Thank you.

Speaker Change: Thank you. This does conclude today's conference call. You may disconnect. Your lines at this time and have a wonderful day. Thank you for your participation.

Operator: This does conclude today's conference call. You may disconnect your lines at this time and have a wonderful day. Thank you for your participation.

Brian Coleman: There's no, to my knowledge, there's no industry members or anyone advocating for any changes to the existing AM Act. There was a congressional review process on the refrigerant management rule that was issued by the EPA in September of this year, which in part included the mandates for the use of reclaim. It doesn't look like that congressional review of that particular rulemaking is a priority for the current Congress. When we looked at the list from the House majority leader relative to the congressional review projects or process, anything associated with the AM Act didn't appear to be a priority for them.

Brian Coleman: Great. That's very helpful. Thanks for the insight. Thank you.

Brian Coleman: This does conclude today's question and answer session. I would now like to turn the floor back to management for closing remarks. Thank you, operator. I'd like to thank our employees for their continued support and dedication to our business. and both our long-time shareholders and those that recently joined us for their support. We look forward to speaking with you after the first quarter results. Have a good night, everybody. Thank you.

Operator: This does conclude today's conference call. You may disconnect your lines at this time and have a wonderful day. Thank you for your participation.

Q4 2024 Hudson Technologies Inc Earnings Call

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