Hudson Technologies, Inc.

Ladies and gentlemen, please stand by. We are about to begin. Hello, everyone, and thank you for joining today's Hudson Technologies Second Quarter 2020 Earnings Report. All lines are in a listen-only mode, but after today's prepared remarks, instructions on how to share a question will be given to our audience. To get us started with opening remarks and introductions, I am pleased to turn the floor to Ms. Jennifer Belladeau. Welcome, Jennifer.

Thank you. Good evening, and thanks for joining us tonight. Welcome to our conference call to discuss Hudson Technology's financial results for the second quarter of 2020. On the call with me today is Brian Coleman, President and Chief Executive Officer, and Nat Krishnamurti, Chief Financial Officer. 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 business 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. We 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. With that out of the way, I'd like to turn it over to Brian Coleman.

Thank you, and good evening. This has been a difficult last few weeks at Hudson, as we mourn the unexpected loss of our founder, Kevin Zugabe. Many of you reached out to express your condolences and that outreach has been very much appreciated. Professionally, Kevin was an industry pioneer with a love for innovation who applied his engineering expertise and market knowledge to build this company from the ground up. Personally, Kevin brought his energy, kindness, and sense of humor into our offices every day. And candidly, we are still in the process of adjusting to his absence. However, over the years, Kevin put together a very strong operating team, and each of us is committed to driving the continued success of the company he built. Before we begin with our review of the second quarter, please join me in a brief moment of silence to honor Kevin's memory. Thank you. Our second quarter results were solid, particularly in light of the challenging landscape that Hudson, our industry, and the nationwide economy is still contending with due to the persistence of the COVID virus. During the second quarter, closures of public venues, such as office buildings, recreation centers, schools, and universities, negatively impacted our end markets and the overall demand for refrigerants. While we saw a slight increase in the pricing of certain refrigerants in the quarter, This improvement was offset by lower volumes, which resulted in a revenue decrease compared to the second quarter of last year. However, despite the volume headwinds associated with the overall economic downturn, gross margin improved, we achieved solid operating income, and we saw a return to profitability. Notably, Hudson generated over $6 million of operating cash flow during the second quarter. Our financial position and liquidity remained strong, with total liquidity at June 30, 2020 of approximately $39 million, which includes cash and revolver availability. In addition, in the months since the close of the quarter, we have repaid an incremental $7 million of our debt. Finally, we've made certain performance targets set forth in our credit agreement, and as a result of achieving those targets, we have terminated the services of our Chief Restructuring Officer. so we are very pleased with the progress made this quarter despite the challenging environment. While there are still many uncertainties associated with this pandemic, we remain focused on the elements of the business that we can control. Our priorities remain in continuing to protect the health and safety of our employees and in keeping our products and supply to best serve our customers across all channels. We have the benefit of more than 30 years of experience in this industry and that experience has allowed us to adapt to changing economic and industry dynamics while executing our operational strategy. These have been some difficult times, but Hudson has proven our agility when faced with challenging environments. We're once again relying on that strength. With the business and facility closures across our country, some temporary and some permanent, this has not been a typical selling season. As you know, we look at the sales season as a nine-month season because in any given quarter, there's the potential for the economy or the weather to have a significant impact whose gains or losses can be mitigated in another quarter. As we continue to move through the 2020 selling season, we've seen R22 pricing remain constant. However, as I mentioned earlier, economic factors resulting from the various government restrictions that have been put in place as a result of the COVID outbreak have negatively impacted demand and may cause continued pressure on demand in the third quarter. This is a fluid economic environment and will take some time until we understand the full impact to our industry. We are encouraged by the improved margin performance in the quarter and believe we have the opportunity to continue to drive improved margins through the balance of 2020. as we replace higher-priced inventory with lower-priced products. We believe that customers' inventories are low, and with the elimination of R22 production and the importation in 2020, we expect to see a tightening in the supply of virgin R22 as we close out the selling season. Moving forward, we remain confident that the marketplace will likely adopt a phase-out of HSC refrigerants as the development and use of more environmentally-friendly products continue. As we mentioned before, the American Innovation and Manufacturing Act of 2019, or the AIM Act, which proposes to phase down HFC production over the next 15 years is pending further consideration by both the House and Senate. The bill enjoys bipartisan support and, if enacted, would start a regulated phase down of HFCs that will lead to the establishment of an allocation system similar to what we saw with the phased-out of R22. We would then expect to see a tightening in the supply-demand balance for HFC refrigerants, likely resulting in HFC price increases. As refrigeration systems are upgraded and new construction continues, HFCs represent a long-term growth opportunity, and we expect HFC sales will continue to grow as a percentage of our revenues. These are unprecedented times, but we have a strong management team in place committed to driving our company's success by leveraging three key competitive advantages. Our strong and established distribution network which firmly positions us at two key points in the supply chain. Our diverse portfolio of refrigerants which allows us to be a sales source for all refrigerants from legacy CFC gases to the HCFCs and HFCs that are commonly used today. and onward to the next generation HFOs. And lastly, our state of the art proprietary reclamation technology that enables us to reclaim all of these refrigerants, becoming the producer supplier of phased out refrigerants. Hudson is well positioned in the marketplace with our ability to provide any refrigerant any place at any time. We are optimistic about the long term opportunity in front of us and focused on growing our leadership position in the refrigerant and reclamation space. Now I'll turn the call over to Nat to review the financials. Go ahead, Nat.