Hudson Technologies, Inc.

Good day, everyone, and welcome to the Hudson Technologies Second Quarter 2025 Earnings Call. At this time, all participants are on a listen-only mode, and we'll open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Jennifer Belladeau of IMS Investor Relations. Ma'am, the floor is yours.

Thank you. Good evening, and welcome to our conference call to discuss Hudson Technologies' financial results for the second quarter of 2025. On the call today are Brian Coleman, President and Chief Executive Officer, Brian Berto, CFO, 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 express 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'd like to turn the call over to Brian Coleman. Please go ahead, Brian.

So good evening, and thank you for joining us. As sometimes happens, we had a slow start to this year's cooling season, which is why we always refer to a nine-month selling season rather than looking at it quarter to quarter. Our industry is driven by comfort cooling, so we are obviously weather dependent, but we focus on things that we can control. That focus is centered on ensuring we best serve our customers' needs at all times, which can mean we're buying the recovered refrigerant or selling them refrigerant to meet theirs or their end customer's demand. During the quarter, we did see a lift in nearly all refrigerant pricing, some of which had to do with tariff increases. However, we did experience slightly lower sales volume when compared to the second quarter of last year. In spite of the external conditions, such as a cooler spring weather and supply shortages relative to replacements of lower GDP refrigerants, we posted solid second quarter results with revenues of $72.8 million and gross margin of 31 percent. During the quarter, we saw continued strength in our reclamation business as we leveraged our enhanced refrigerant recovery capabilities We remain focused on expanding our purchasing presence in the marketplace with both new and existing customers, as we've historically done. We'll provide a more detailed update around the progress in our reclamation business as the full year wraps up. As we've often mentioned, recovered refrigerants returns typically trails refrigerant sales by one quarter each season. DLA orders during the second quarter were in line with our expectations. and our anticipated annual order run rate for the DLA contract. We are now entering our 10th year serving the DLA and DOD needs, and we believe we will have information on the new contract award results later this year. As I mentioned a moment ago, refrigerant pricing improved in the second quarter, showing a sequential increase for the first time in the past two cooling seasons. When we discuss pricing, we're generally focused on the price of HFC 410A, which represents about 70 percent of the total aftermarket demand for HFCs. During the course of the second quarter, HFC pricing reached $8 per pound and favorably impacted our gross margin performance. Currently, we're seeing stabilizing prices with some slight declines from the second quarter, which may be associated with the volatility of tariffs. Therefore, with our visibility today and recognizing quarter four is our seasonally slowest quarter, we are maintaining our full-year 2025 gross margin target of mid-20% or potentially slightly higher depending on the strength of the third quarter. Looking at the broader regulatory landscape, the elements of the AIM Act, including the mandated phase-down of HFCs, remain in place. That said, it's our understanding that the new leadership at the EPA is continuing their evaluation of certain regulations, including the AIM Act. We are closely monitoring all the developments and are in direct and frequent communication with the EPA, as well as members of Congress. Our unlevered balance sheet at June 30, 2025, reflects $84.3 million in cash and no debt. Our capital allocation strategy remains committed to the three pillars, investing in organic growth, pursuing acquisition opportunities that will strengthen our capabilities, and the opportunistic repurchase of our stock. In keeping with this strategy, we repurchased 2.7 million of stock during the second quarter. 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.