Hudson Technologies, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Hudson Technologies first quarter 2022 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. It is now my pleasure to turn the floor over to your host, Jen Belladeau. Ma'am, the floor is yours.

Thank you. Good evening, and welcome to our conference call to discuss Hudson Technologies financial results for first quarter 2022. On the call today are Brian Coleman, President and Chief Executive Officer, and Nat Krishnamurti, 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. 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. 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 other factors that require our actual results to differ materially. With that out of the way, I'll turn the call over to Brian Coleman. Go ahead, Brian.

Thank you. Good evening, and thank you for joining us. 2022 is off to a very strong start, building on the momentum we saw coming out of calendar year 2021. We delivered record first quarter results as demonstrated by significant revenue growth, substantially enhanced margins, and improved profitability. The first quarter kicks off our traditional nine-month selling season, and we saw a continuation of the upward pricing trends that characterize pricing activities in the back half of calendar year 2021. You may remember that our 2021 season got off to a slow start and then picked up momentum as the year progressed. In addition to record revenue for the first quarter of 2022, gross margin increased to 54 percent, mainly due to significant increase in the average selling price without material appreciation in the cost basis of certain refrigerants. Simply put, selling prices for refrigerants increased faster than our cost of refrigerant in the quarter. Additionally, we benefited from increased sales volume as we continue to focus on developing strategic working relationships with customers who value not just our ability to meet their refrigerant needs today, but who also recognize the value of our sustainability portfolio. This growth was achieved while we continued to exit certain non-core sales, which is a pattern we started during the third quarter of last year and likely conclude this year. Over the years, we've established a solid base of long-standing customers, and we remain focused on adding customers who understand Hudson's value proposition as a supplier and a producer in the circular economy of refrigerants through reclamation. That said, our first quarter margin was unusually strong and not sustainable over the long term. We expect margin performance for the full year 2022 will moderate to levels similar to last year as the cost of inventory will increase through 2022. The start of 2022 marks the beginning of our industry's compliance with the AMAC regulations, which mandate a 10% step down in the production and consumption allowances for HFCs for 2022 and 23, with a 40% reduction in the baseline scheduled to take place in 2024. HFCs are currently the most commonly used refrigerants And as a leading reclaimer, we are uniquely positioned to fill the anticipated HSC supply gap as virgin production is phased out. It's important to note that the AMAC mandates a much more aggressive and faster phase down than what we previously saw with the R22 phase out and promotes the use of reclaimed refrigerants to meet demand as virgin production steps down. As a leading reclaimer with the reclamation technology capabilities and established distribution network in place, we believe this presents us with a tremendous market opportunity to expand our leadership role in the industry's transition to cleaner, more efficient, next generation cooling equipment and refrigerants. We previously communicated longer term annualized revenue and operating income targets of 350 million and 72 million respectively. for 2023 through 2024, based on pricing in Europe as they were implementing their HSC phase-down. With our visibility today, assuming this year's pricing trend continues, and with the initial impact of the AMAC regulations, we believe we're on a path to reach those longer-term targets at a faster rate than we originally estimated. We remain confident that 2022 will be a year of tremendous opportunity for Hudson. In addition to the AIM Act, we are positioned to benefit from industry compliance with initiatives put forth by the California Air Resources Board, or CARB. As we mentioned before, CARB has proposed a requirement that OEMs use a minimum of 10% reclaimed refrigerants in the factory-charged equipment, and we've been actively pursuing opportunities to assist OEMs in meeting this requirement. We are intent upon growing from our initial partnership supplying reclaimed refrigerant to Aprilaire, to expanding our brand recognition among other OEMs in our industry as they seek a source for reclaimed refrigerants. Hudson was founded on a commitment to promoting and enabling sustainable cooling practices. Our focus on recovering, reclaiming, and reusing refrigerants reduces waste and greenhouse gas emissions, creating maximum economic value for used refrigerants. The integration of refrigerant reclamation, sales of our branded Emerald Reclaim refrigerants, and our site services creates a powerful platform for us to continue to lead the way in providing measurable and verifiable sustainability practices for our customers wishing to document their positive impact on the environment. As we begin to enter the heart of the 2022 selling season, We are energized by the opportunities we're seeing in the marketplace for our products and services. With our long-standing customer base, diversified technology and product offerings, and proven distribution network, we believe we're ideally positioned to capitalize on the changing market conditions as the industry transitions from existing to next-generation refrigerants and equipment. Now I'll turn the call over to Nat to review the financials. Go ahead, Nat.