Hudson Technologies, Inc.

This conference is being recorded. I will now turn the conference over to your host, Jen Belladeau of IMS Investor Relations. You may begin.

Thank you. Good evening, and welcome to our conference call to discuss Hudson Technologies' financial results for the first quarter of 2025. On the call today are Brian Coleman, President and Chief Executive Officer, Brian Berto, Chief Financial Officer, and Kate Houghton, Hudson's Senior Vice President of Sales and Marketing. 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 of the factors that could cause our actual results to differ materially. With that out of the way, I'll turn the call over to Brian Coleman. Go ahead, Brian.

Good evening, and thank you for joining us. We are pleased to have started 2025 with slightly improved sales volume in the first quarter, which is a promising start to this year's nine-month selling season. That said, we did see a revenue decline as expected in the quarter to 55.3 million with gross margin of 22%, reflecting continued lower overall refrigerant market pricing as compared to the first quarter of last year, which offset our sales volume gains. First quarter 2025, refrigerant pricing declined slightly as compared to the fourth quarter of 2024. And this year's first quarter pricing was approximately 40% lower than the first quarter of 2024. We also saw continued momentum in the refrigerant recovery activities that supply our reclamation business, which resulted in increased reclaim volume during the first quarter. Last year's strategic acquisition of USA Refrigerants has strengthened our capabilities and our reach around the purchasing of recovered refrigerant. We are focused on continuing to improve our purchasing presence in the marketplace. In addition, much of the volume gained in the quarter came from the USA acquisition. Finally, as expected, we saw orders related to our DLA contract at levels consistent with last year's first quarter. At the close of the first quarter, pricing for certain HFCs was still under $6 per pound. But since the close of the quarter, we've seen price increase to over $6 a pound. As I mentioned on the previous quarterly calls, when we discuss HOC pricing, we're generally focused on the price of HOC 410 , which represents about 70 percent of the total aftermarket demand for HOCs. I'm sure I don't have to point out that the microeconomic environment is quite volatile. Currently, tariff costs are beginning to affect our supply side costs for both virgin refrigerants and cylinders. The industry, including Hudson, has begun to pass these higher costs through the distribution chain. As a result, and at this moment, we believe our 2025 gross margin will be closer to the mid-20s, improving slightly from our first quarter margin performance. With the many fluctuations in tariffs, the current situation is creating uncertainty, both for our costs and for our prices to our customers. We are also seeing supply-side disruption for the next generation refrigerants associated with the AMAX technology transition rule. The technology transition rule mandates that cooling systems manufactured starting January 1st, 2025 and moving forward can no longer use certain higher GDP HSC refrigerants such as 410A and will need to use lower GDP refrigerants like 454B and 32. The market demand for these new lower GDP refrigerants is currently exceeding production volumes, but we believe additional production capacity has been added, and production should balance out with demand by the latter part of this cooling season. The tariff situation has also resulted in higher costs for newer refrigerants, and for the moment, those costs are also being passed through the distribution chain. We are in the early stages of this year's cooling system, we are seeing some shortages impact conversions to lower GWP refrigerants and new system installations. I want to take a minute to discuss the change in the administration and its potential impact to the EPA. For the moment, it appears staff associated with administering the AIM Act are in place. We do believe the EPA intends to examine the many regulations in place, including a review of the final rulemakings, associated with the AMAC, which would then include the refrigerant management rule. That said, we are early in the EPA's evaluation process, so we, along with others in our industry, are actively communicating with the EPA and members of Congress. Lastly, during the quarter, we further strengthened our unlevered balance sheet and ended the quarter with $81 million in cash and no debt. We remain focused on the priorities of our capital allocation strategy, including investing in organic growth, pursuing acquisition opportunities that will strengthen our capabilities or geographic reach, and the opportunistic repurchase of our stock. To date, in 2025, we have repurchased $4.5 million of common stock under our stock buyback plan. Now I'll introduce Kate Houghton, Senior Vice President of Sales and Marketing, to provide some additional detail around Hudson's market opportunity. Please go ahead, Kate.