Hudson (HDSN) 9 Mar 222021 Q4 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Hudson Technologies' Fourth Quarter Year End 2021 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, John Nesbett, Investor Relations for Hudson Technologies. Sir, the floor is yours.

Thank you. to for call year-end the welcome Technologies' discuss XXXX. and results financial fourth evening, our to conference Hudson Good quarter and

Executive a moment On President read the Chief are today statement. to Officer. Officer; Harbor Chief Financial take the Krishnamurti, and now Brian I'll Safe Nat call and Coleman,

this call, are will address predictions the future make opinions the expectations, forward-looking statements. During or conference course certain statements. forward-looking of that we All statements about

we these in best and consider principal that ask change them Although understand the Hudson's XX-K view recent Form review assumptions. in and that And Brian. not We number they a affect interpret these performance our of over statements to current Please control, based business of of see expectations and and risks not we subsequent with are actual that, and guarantees would and reflect our today, involve that our cause them urge that of materially. could you most and differ filings a uncertainties Go discussion performance. other that to are results now certain our and industry business on our you can elements cases light. are SEC risks since our within of Coleman. as ahead, future Brian turn the we'll and to other call factors our With the they

We're you us. and with for pleased thank year fourth Good joining full closed and to quarter evening record results. XXXX

has takes January it month our quarter, note that nine improved selling outside revenue historically enhanced quarter and to It through performance traditional season, profitability. is significant reflected Our fourth weakest falls important from which given been our quarter place September. growth, strong fourth that our margins

the after fourth certain close season our selling the in the which average the year, refrigerants, saw strong quarter price this performance. of of continued industry a drove strength selling However, unusually

from into to XXXX increase, XXXX. stable expected built many for perspective, the it Instead, quarter some to steadily carry pricing throughout upward XXXX. quarter. energized price third not remain pricing done. has the rather are pricing sequentially throughout we momentum the the traditionally We to forward, average had increased trended as To Looking fourth of certain quarter we selling provide fourth refrigerants refrigerants but

As the of we phasedown HSC season, this XXXX continue, as believe behavior the enter will Act we begins. particularly AIM pricing

initial HSC trend as to in Assuming for million look to the we phasedown selling see HSC we pricing XXXX. the XXXX this doubling continues few XXXX guidance we season, Europe the could revenues could levels, a from there, under refrigerants exceeding next steps If taken price to the expect for in years. pricing relative for $XXX in see

basic be increase. which should if can't with income an timing reach such could Moreover, levels, been this we overtime, $XX analysis. in dynamic certain a our we see be million. those growth or has those pricing But for any operating levels of the a will While such stimulus reach not of reach pricing revenues and we factored reclamation, $XXX into million over

full at move price higher beyond, inventory XX% then we margin growth and as in As points level, expect XXXX reflected expect refrigerants at acquire performance the through the see HSC to to we we XXXX low year.

a is for of favorable XXXX Hudson announced baseline. a $XX see operating reflecting the XXXX our Hudson, ABL expect our to in week, we But details a In improving and into than next other term HFC a original of That future strong lower million. Virgin have we related total and entered new The development opportunity to HCFs than $XX increased more performance. into in from baseline with of in the our maintaining two of go we less will believe to reclamation loan to short, million refinancing to out. levels will Reclamation visibility As have XX AIM today, we greater take the be Nat allowances for on acquire years. to cost, debt. further a With this. XX% we our XXXX a and Virgin key facility the the securing a compared requires new a year an years, for meaningfully Act the model at we to margin improve tremendous reduction orderly as Refinancing reduction for to last expense legislative a to said, development, AIM purchases. the debt phasedown structure has critical be gas an mandate with interest This season. with and expected capital increase, for gross our improvement because our scheduled step-down HSC Virgin production XX% phased recap, reclaim volumes the industry could in begin the necessary rate. availability well will as overall completed gross ensure our as wouldn't reclamation Act market consumption of over interest effective benefit X% we positioning, production low comply margin that, see to AIM Act place cost levels introduced in ample supply initiatives. of will approximate begins strong the a particularly debt the To as cumulative XX% until

an believe away we act leading supplier enable production HSC Virgin a supporting the reclaimer, from this as HCFs. to also will while of Hudson transition As

ability reclaim including process CFCs, and all HCFCs, refrigerants the HFOs. gases, have HFCs to and We

positioned reclamation demand we efficient greener a accelerated enable drive distribution supply long-standing provide fill anticipated leading install the expected capabilities we as market to network, are With base near-term, efficient our the supply GAAP. In reclamation customer of opportunity. industry to will continues our HFC reclamation transition HFCs well equipment capabilities, relationships activity Virgin to the the So, and for and to refrigerants. long-term tightens, expand,

actively requirement. charge XX% a refrigerants or use also have for has healthy CARB requirement Board their in California the this end, announce refrigerants Air air OEMs Hudson been Currently, assist minimum are solutions We meeting will reclaim factory CARB for mentioned to January, previously in that in Resources to reclaim that, we've used homes. and To a proposed supply pursuing and OEMs excited that to initiatives. opportunities we equipment, AprilAire

for to as their and approach refrigerants with they an reduce Hudson waste incorporating conjunction a gas with economy U.S. was reclamation but thrilled refrigerants, founded are phasedown which in refrigerants. circular products. greenhouse support Hudson of the sustainability on adopter only and value used AprilAire refrigerants approximately of represents are reclaim to a in We to and source us HSC in refrigerants XX% maximum the reusing the work to create take activity not and focused and refrigerants. of into early emissions economic key also on can AprilAire as recovering reclaiming commitment positions

are the opportunities to our seeing business services to grow by provide We our better benefit to and are energized the we environment.

Now, Nat financials. I'll Nat. to the call ahead review to Go turn the over

Thank you, Brian.

prices margin of of approach in XXXX to compared attributable fourth performance. higher context XXXX. the inventory XX, in FIFO growth XXXX, fourth Gross during favorably quarter selling XXXX the increase the primarily December improved fourth quarter $XX.X our the in is the related is which selling an ended quarter of recorded Hudson XX% quarter, million, gross XX% XX% of prices $XX.X period. our of comparable the impacted The For gross quarter. to margin the increase in for to revenues refrigerants to margin was The to compared million certain for

cost or was million, payroll of or per XXXX. to expect diluted XXXX, $X.X through diluted XX.X% fees. fourth or of end $X.X fourth gross per SG&A net XXXX, of per and million, or recorded move to XXXX. loss $X.X compared of for we quarter of in share of performance compared and $X XXXX. net income the operating and fourth an in quarter same of in by As the the was be $X.XX operating million revenue, $X.X of basic in driven income level. loss margin XX.X% million the compared of as Company of points higher a of basic $X.XX in share the fourth of year of fourth The $X.X XXXX of quarter we quarter the in higher full quarter and XX% the million loss to slightly to $X.XX costs XXXX the lower period million SG&A professional revenue We made of To recorded

credit last million, and Company's Fargo financial X of December to overall facility in full has in another a opportunities such was XXXX. enables terminated. the TCW the as for a up Looking term this loss loan TCW the ratio of an credit ratio from mentioned, The Company's Declining comprises selling or of million an philosophy. facility increase of existing to $X.X flow Asset to for closing, result first in X.XXX months revenues pricing existing with its margin million, XXXX. $XX with has potential the in season. XX% procure the revolver million close a XXXX. capacity. the agreement company availability has for repaid $XX of Company Subsequent access term XXXX mainly $XX.X Company December that per entry in for facility and LLC in loss always participating XX pre amended increase and as $XXX.X year year leverage been per The new as XX, better of X.XX facility $XX debt a term availability year revenues million manage borrowing the Future year with quarter, XXXX, XX, and ended compared Management provides loan entered it Brian net to upcoming significantly share XX full down full $X.XX of or diluted out compared loan pay to $XXX.X trailing diluted XXXX a million cash Company Wells basic FILO million. credit Hudson loan revolving facility, trailing At our for full Gross was of opportunities, the revolving into for months Company ended a was continuing Increased inventory the or reported accelerated to the of approximately at recorded amended leverage for the in conjunction XX% basic XXXX, to million $XX providing million, for XX% our into announced for compared fourth to improved the and of our net XXXX. under new to XXXX. $XX increased term facility $X.XX performance to to rate, $X.XX was which and income share In at

I partners have over platform we We facilities look turn Brian. and as loan us provide a flexibility back strong now Brian? our and forward. credit to with liquidity and revolving the term loan will solid and financial call

Nat. Thanks

refrigerant the and we're enter focused industry. to now and we selling floor excited on the Operator, ahead XXXX we'll growing reclamation opportunities the in As questions the leadership our open season, about position

[Operator with Gerard question is from Instructions] First coming Sweeney ROTH Capital.

line live. Your is

couple you. questions for A

any Just a how market the Do a sometimes have strategies this HSC maximize curious, it's going? to the recovery sort maybe planning of opportunity? is been In in of the past, bit little challenge. you

how if look go at forward you on a market the curious, Just opportunity?

in yes, We we say volumes I'd were the than to expected compliance law. less the So, certainly overall the expected. more past, reclamation

expected With that particular behavior. change economics amount differences than phase lot a also some We of would the the this regards past. have might or drive we phase seen down, HSC in there's down, to of help

maybe Virgin First of reclamation. that the seeking it faster grow opportunity production reclaim as help can facedown as are see ways an expected extent to improve than the could to well. then all, environmental accelerate organizations They

So, that meet the but participate California help a OEMs the that and shouldn't of certify to small now so of and there's OEMs uncertain growth a level there's their Certainly of requirement percentage requirement factory federal compliance reclamation, in to reclaim supply state side what do, have a to that needs. of charge in use adequate the for their might we that equation.

production a the when HFOs. The grow that even down, to help far production, about we see this to HSC likely feel opportunity get is end other level. relative at At but on limit some needed to we'll HSC strongly phase some that be going the of producer is of Virgin we thing level, the to

there help at that in HSCs, process is if certainly So, inadequate that time, as virgin well. reclamation could

phase out to So, there's a the particular compared lot in prior phase of different this as out. factors

including in driven reclamation, but across looking not driven we're really significant and regulation, an board, in me, reclaimers. by growth So, the participants this see business, opportunity to by necessarily forward by excuse industry, the to reclamation

There's the like. way everyone it the more the that HVAC company all sounds it? at from what stakeholders, local producers. way of it's looking from But a Is to fair

XX% think kind friendly reclamation of we And in or now, the and to range, participate to a you thing, the opportunity see for a base installed say, HSCs XX, other the growth could want Is anybody installed means probably argue it, refrigerants. that's they're we something just change to of have out right in expect in through XX, tremendous XX% about States. percentage United you base in recovery XX in or over that. XX%, to level, range. we overall XX% our if large chain way going are of this that HFCs that is say next overall to we'd And of Yes, and about work that environmentally the would years. in change the the as it very more And some going use the let's

AIM pricing, there but to chain or pricing into Do issues. Or the it just insight pricing with the AIM changing is of is just supply there they're result if been of a the supply also Are any increases parts bit a Act? driven by you chain Act, pressure that? was any purely gears HDC or moving little obviously, know is

be increases supply possibly in we It's see whether be half now as say year, of demand, year, relative imbalance. or last a improvement the demand it might let's at going starting both. Certainly, But they And availability to delays foreseeable the are overall existed the back the there future, just continue in are transportation. half. likely chain from costs it this costs, to price relates to just material transportation towards to also for reduction first throughout least probably issues supply raw

just little Got it. a years shifted for bit pre-buy final and of buying several me, jump And you in bit I'll shift and year market opportunity for for then patterns any a Are inventory. is, the a a towards, refrigerants time little in some there line question curious, more back was ago, this refrigerants? seeing in then

hybrid I this might there think a be But, Not do necessarily. year.

than think was tremendous about As result old look folks bit days, the stocking go that a are we where to saw go to It to concerned occurred ever a earlier more a pre-XXXX more year, stock At like to period, end a days. the don't was bit there would've day, I in later. going wouldn't may going expect the little may and than as availability back probably be back we the I little products QX. to of necessarily the last be but old more

[Operator Capital question Instructions] from The coming next is Group. Ryan Craig-Hallum Sigdahl from

Your live. is line

$XXX then volume Good questions down afternoon, the XXXX. XXXX? using is Brian. million Thanks assuming directionally R-XXXA? One, Curious price two And mentioned least are revenue that for current is the up secondly, Curious, assumption questions. from you R-XX you what you're that. flat for and at on on

volume some to we've that comes the we're is about, it when So, of target assuming talked flat.

than the to also supply versus with results would are regards or make change circumstances better reflected only thus far far. material no talked side, thus those we because what about Virgin, reclaim We assuming meaning have

pricing it $XX constant to is that's level probably to $XX to $XX at now higher. the R-XX saw the it and folks jump certainly are about that seems above year. level but on the typically throughout but relates we $XX a pound XXXX CFCs. HFCs, course, depending could It that significant pricing be pricing is a $XX because with sustainable you of definitely we higher, seeing to occurred fairly refrigerants regards So, go level possible at kind the had With a of pound, maybe and as think now the level slightly

out compare margin XX%-ish mentioned that then I you at targets? gross low two? gross XXXX. How XXXX XX% still do guess assumption think I Can a implies your for caught right of looking I you contrast on the and believe the compare so expectation kind I And just it you it, margin, percent here. there

reclaimed to margin do But somewhat more sustainable to growth we think And will now, a better a What is we're basis that the We gross happen years. we level. than start to trying that level. low that the relative see in think also is XXs extent could on better did later to now we suggest volume. we right FIFO sustainable the in inventory that than probably certainly

XXXX HFC and half margin because until expecting you see return improvements XXXX. out we in in back usually used going So, on of reclaimed the when that in the comes growth But go reclaimed typically gas are you're that inventory sell XXXX the to relative see to the in gas. year, into the growth season,

relationships, what's higher we're And that and find are that activities organizations extent margins to we as we're Virgin the reclaimed will like pursuing guests a So, the supply a reclamation we looking grow because opportunities. with ways happening more to on typically than to reclamation, about acquire opportunity be updating AprilAire that side. to update continue excited

on In been it's we just going pays issues or historically, about OpEx, current and Then about kind that chain HSC out Great. conditions, with forward should of we how we think how the fixed think good have? supply bad?

Yes, flat, type same SG&A that we the pretty them. with I it's started we would maintain probably say of

previous Thanks Asset considering know I through Management, lenders on decided TCW debt One start lender. process on can issues kind there. I quite the you a more guess you just how who refinance, few and had are you the the with of the

So this Thanks. curious how around? went

Sure.

would in this due different the it and into over and them to So with many is same day, we that's The were understand a similar to nice the broad thing TCW process. it better, test we TCW. spent way types months, many they asking, with questions of group with this small spent the and personnel, folks the the somewhat business it diligence the leader of the was time we lenders relationship questions the time fairly working At that they when the that investment. just a overall marketplace really continue are reviews net look all end wanted going out with into then team to get about them made the

and business times relationship. the same in it's work lenders, case, lot of folks the So the you new over both another with folks, pieces they a But to have this for you'll maintain to puzzle. of it where group hand

happy have, strong really the in They with a the we're reputation very relationship. I industry. So think

So we're long with forward to relationship looking a very them.

call. call the I'd Q&A the closing This remarks. portion for concludes of like to turn to management today's back

for to support and you, you Thank employees thank with our thank to we thank you a their dedication joined continued good forward I'd for results. today's support. shareholders Well, participating everyone operator. and after longtime again quarter are conference I everybody. look those for their in our our the Thank first speaking you. to recently us call, like business. want that Have night and

Thank ladies today's This conference and you, gentlemen. does call. conclude

wonderful You participation. Thank at day. time lines may phone and for disconnect your a you have this your