Hudson Technologies Inc (HDSN) 2019 Q1 法說會逐字稿

Greetings, and welcome to the Hudson Technologies First Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce Jen Belodeau, Thank you, Jen. Please go ahead.

您好，歡迎來到 Hudson Technologies 2019 年第一季度收益電話會議。（操作員說明）提醒一下，正在錄製此會議。現在我很高興介紹 Jen Belodeau，謝謝你，Jen。請繼續。

Good evening, and welcome to our conference call to discuss Hudson Technologies' financial results for the first quarter of 2019. On the call today, we have Kevin Zugibe, Chairman and Chief Executive Officer; and Brian Coleman, President and Chief Operating Officer.

晚上好，歡迎參加我們的電話會議，討論 Hudson Technologies 2019 年第一季度的財務業績。在今天的電話會議上，我們有董事長兼首席執行官 Kevin Zugibe；總裁兼首席運營官 Brian Coleman。

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, they're not within our control, we would ask that you consider and interpret them in that light. We urge you to review Hudson's Form 10-K and other SEC filings for a discussion of the principal risks and uncertainties that affect our businesses and our performance and other factors that could cause our actual results to differ materially.

我現在花點時間閱讀安全港聲明。在本次電話會議期間，我們將做出某些前瞻性陳述。所有涉及對未來的期望、意見或預測的陳述均為前瞻性陳述。儘管它們反映了我們當前的期望，並且基於我們對行業和業務的最佳看法，但它們並不能保證未來的表現。請理解，這些陳述涉及許多風險和假設，並且由於這些因素可能會發生變化，並且在某些情況下，它們不在我們的控制範圍內，因此我們會要求您從這個角度考慮和解釋它們。我們敦促您查看 Hudson 的 10-K 表格和其他 SEC 文件，以討論影響我們業務和業績的主要風險和不確定性以及可能導致我們的實際結果出現重大差異的其他因素。

With that out of the way, I will turn it over to Kevin. Go ahead, Kevin.

有了這個，我會把它交給凱文。來吧，凱文。

Good evening, and thank you for joining us. As many of you have come to understand, the refrigerant industry is truly an ever evolving landscape. Buying patterns change, new refrigerants and equipment are introduced or phased out and refrigerant pricing can fluctuate dramatically based on the producers' outlook. At Hudson, our management team, which includes industry veterans from ASPEN Refrigerants has more than 30 years' experience navigating the highs and lows of the marketplace and perhaps the most consistent trend in our industry is that demand for refrigeration and cooling systems continues to grow. There is continuing demand for systems that keep food fresh while it's transported and when it arrives at stores and there is ongoing demand for residential and commercial cooling systems to keep us comfortable at home and at work.

晚上好，感謝您加入我們。正如你們中的許多人已經了解到的那樣，製冷劑行業確實是一個不斷發展的領域。購買模式發生變化，引入或淘汰新的製冷劑和設備，製冷劑價格可能會根據生產商的前景大幅波動。在哈德遜，我們的管理團隊（包括來自 ASPEN Refrigerants 的行業資深人士）擁有超過 30 年的市場高潮和低谷經驗，也許我們行業最一致的趨勢是對製冷和冷卻系統的需求持續增長。對在運輸和到達商店時保持食物新鮮的系統的需求持續存在，並且對住宅和商業冷卻系統的持續需求使我們在家中和工作中保持舒適。

So despite the fact that our industry is currently working through a challenging period, at Hudson our experience tells us to remain agile and innovative as we focus on growing our business and also leaves us confident in the long-term opportunities ahead.

因此，儘管我們的行業目前正處於一個充滿挑戰的時期，但在哈德森，我們的經驗告訴我們在專注於發展業務的同時保持敏捷和創新，同時也讓我們對未來的長期機遇充滿信心。

Air conditioning and refrigeration systems will be around for decades to come and Hudson provides every gas needed for the efficient functioning of these systems. It's not always easy to be patient through difficult market dynamics, but we remain focused on executing our growth strategies and expanding our customer base by leveraging our strong distribution network to provide any refrigerant any place at any time.

空調和製冷系統將存在數十年，而哈德遜提供這些系統高效運行所需的所有氣體。在艱難的市場動態中保持耐心並不總是那麼容易，但我們仍然專注於執行我們的增長戰略，並通過利用我們強大的分銷網絡隨時隨地提供任何製冷劑來擴大我們的客戶群。

As we expected, our 2019 selling season has started with a continuation of the just-in-time buying pattern our customers initially in the latter part of the first quarter in 2018 and maintained throughout the 2018 selling season.

正如我們預期的那樣，我們的 2019 年銷售季始於我們的客戶最初在 2018 年第一季度後半段持續的即時購買模式，並在整個 2018 年銷售季中保持不變。

During the first quarter of 2019, we saw incremental pricing declines for most refrigerants and to a lesser extent a volume reduction compared to the 2018 period, resulting in an 18% decrease in revenue as compared to the first quarter of '18.

在 2019 年第一季度，與 2018 年同期相比，我們看到大多數製冷劑的價格遞增下降，並且在較小程度上出現了銷量下降，導致收入與 18 年第一季度相比下降了 18%。

We're entering the warmer spring season and expect to see volumes begin to come back as we move into the heart of the 9-month refrigerant season. Pricing and weather are elements of our business that are external forces encountered in any refrigerant sales season. So we're focused on applying our many years of experience in navigating the forces within our control.

我們正在進入溫暖的春季，隨著我們進入為期 9 個月的製冷劑季節的核心，預計銷量會開始回升。定價和天氣是我們業務的要素，是任何製冷劑銷售季節都會遇到的外力。因此，我們專注於運用我們多年的經驗來駕馭我們控制範圍內的力量。

Hudson is a leader in the growing refrigeration and cooling sector and the market for refrigeration and cooling systems remains strong.

Hudson 是不斷發展的製冷和製冷行業的領導者，製冷和製冷系統市場依然強勁。

We remain optimistic about the long-term opportunity in front of us and believe we have a competitive advantage in the marketplace because of our long-standing experience and 3 key strategic advantages. First is our strong distribution network, which puts us at 2 key points in the supply chain. Second is our ability to sell all refrigerants from legacy gases like CFCs, today's commonly used HCFCs and HFCs as well as tomorrow's next-generation HFOs.

我們對擺在我們面前的長期機遇保持樂觀，並相信我們在市場上具有競爭優勢，因為我們擁有長期的經驗和 3 個關鍵戰略優勢。首先是我們強大的分銷網絡，這使我們處於供應鏈的兩個關鍵點。其次是我們能夠銷售所有來自遺留氣體的製冷劑，例如 CFC、當今常用的 HCFC 和 HFC 以及明天的下一代 HFO。

And finally, our patented technology enables us to reclaim with unparalleled speed and efficiency to become leading producer, supplier of phased-out refrigerants.

最後，我們的專利技術使我們能夠以無與倫比的速度和效率進行回收，成為淘汰製冷劑的領先生產商和供應商。

We have proven our ability to evolve and innovate to address changing market dynamics, and we remain focused on executing and improving these capabilities so that we're in the best position to drive growth. 2019 marks the final year of R-22 production. No new virgin production will be permitted starting on January 1, 2020.

我們已經證明我們有能力發展和創新以應對不斷變化的市場動態，我們將繼續專注於執行和改進這些能力，以便我們處於推動增長的最佳位置。2019 年是 R-22 生產的最後一年。從 2020 年 1 月 1 日開始，將不允許新的處女生產。

JPMorgan has published data that indicates there are 50 million R-22 air conditioning units operating in the U.S. and this total does not include millions of units in the refrigeration, large commercial and industrial sectors. With that data in mind, we believe that demand for R-22 refrigerant will have a 20-year duration similar to what we've seen with the preceding phaseout of CFC refrigerants.

摩根大通公佈的數據表明，美國有 5000 萬台 R-22 空調在運行，而這一總數不包括製冷、大型商業和工業部門的數百萬台。考慮到這些數據，我們認為對 R-22 製冷劑的需求將持續 20 年，這與我們之前看到的 CFC 製冷劑淘汰情況類似。

We anticipate once R-22 production is eliminated, the industry will begin to see a supply-demand imbalance that will create a significant opportunity for us. And our ability to reclaim and resell R-22 will position Hudson to fill the demand in an environment where R-22 will be in short supply.

我們預計，一旦 R-22 生產被取消，該行業將開始出現供需失衡，這將為我們創造重要機會。我們回收和轉售 R-22 的能力將使 Hudson 能夠在 R-22 供應短缺的環境中滿足需求。

On our March 6 call, we noted the price of R-22 was at approximately $9 a pound and the price has remained stable with a modest increase since then.

在 3 月 6 日的電話會議上，我們注意到 R-22 的價格約為每磅 9 美元，此後價格一直保持穩定，略有上漲。

While it's still early in the 2019 season, the initial price weakness would indicate that the allowance holders are not seeing or anticipating a near-term tightening in supply. While this may impact our 2019 season, Hudson expects that with the eventual removal of virgin supply, the R-22 market will begin to behave in a true supply-demand manner and as a result expect less volatility in pricing.

雖然現在仍處於 2019 年的早期，但最初的價格疲軟表明配額持有者沒有看到或預計近期供應會收緊。雖然這可能會影響我們的 2019 年季節，但哈德森預計，隨著原始供應的最終取消，R-22 市場將開始以真正的供需方式運行，因此預計價格波動較小。

Our diverse portfolio of refrigerants includes ASPEN's HFC strength, which complements our HFC R-22 and CFC sales, and we are preparing for the future demand for HFO refrigerants, which are designed to ultimately replace HFCs. We are optimistic about the momentum we've seen around the regulation and phasedown of HFC refrigerants and believe that a phasedown of HFCs will lead to the establishment of an allocation system and a tightening in the supply-demand balance that will likely result in increased pricing for these refrigerant.

我們多樣化的製冷劑產品組合包括 ASPEN 的 HFC 實力，它補充了我們的 HFC R-22 和 CFC 銷售，我們正在為未來對 HFO 製冷劑的需求做準備，HFO 製冷劑旨在最終取代 HFC。我們對圍繞 HFC 製冷劑的監管和逐步減少所看到的勢頭持樂觀態度，並相信 HFC 的逐步減少將導致分配系統的建立和供需平衡的收緊，這可能會導致價格上漲對於這些製冷劑。

As systems are upgraded, HFC sales are representing a growing percentage of our revenues. And with the projected installed base, we see HFC as a tremendous long-term growth opportunity for our company. As we move through 2019, we remain focused on implementing strategies to grow our leadership position. We're focused on increasing our marketing efforts, expanding our portfolio products and services to appeal to a broader customer base and reducing expenses.

隨著系統升級，HFC 銷售額占我們收入的比例越來越大。憑藉預計的安裝基礎，我們將 HFC 視為我們公司巨大的長期增長機會。在我們度過 2019 年的過程中，我們仍然專注於實施戰略以提升我們的領導地位。我們專注於加大營銷力度，擴大我們的產品和服務組合以吸引更廣泛的客戶群並減少開支。

We've been through challenging market periods before, and our ability to innovate and evolve are characteristics that have allowed us to grow and develop a stronger business model. We have the people, the technology and the distribution network to leverage and grow our leadership position.

我們之前經歷過充滿挑戰的市場時期，我們創新和發展的能力是使我們能夠發展和發展更強大的商業模式的特徵。我們擁有人才、技術和分銷網絡來利用和發展我們的領導地位。

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

現在我會把電話轉給布賴恩來審查財務狀況。來吧，布賴恩。

Thank you, Kevin. For the first quarter ended March 31, 2019, Hudson recorded revenues of $34.7 million, a decrease of 18% compared to the $42.4 million in the comparable 2018 period. Gross margin for the first quarter was 20% compared with gross margin of 19% in the first quarter of 2018. We reported operating income of $200,000 in the first quarter of 2019, an improvement compared to the operating loss of $900,000 in the first quarter of 2018.

謝謝你，凱文。截至 2019 年 3 月 31 日的第一季度，Hudson 的收入為 3470 萬美元，與 2018 年同期的 4240 萬美元相比下降了 18%。第一季度的毛利率為 20%，而 2018 年第一季度的毛利率為 19%。我們報告 2019 年第一季度的營業收入為 200,000 美元，與 2018 年第一季度 900,000 美元的營業虧損相比有所改善。

Our DLA contract continues to grow, and we saw revenue contribution of approximately $5.4 million in the first quarter of 2019. Operationally during the first quarter, we continued executing on several cost efficiency initiatives that were implemented during the fourth quarter of last year. And we completed the process of closing our national reclamation facility. During the first quarter of 2019, the company recorded a net loss of $4 million or a loss of $0.09 per basic and diluted share as compared to a net loss of $3.1 million or a loss of $0.07 per basic and diluted share in the same period of 2018. The first quarter of 2018 net loss was reduced by $1 million benefit related to the Tax Cuts and Jobs Act of 2017 with no such benefit recognized in the first quarter of 2019.

我們的 DLA 合同繼續增長，2019 年第一季度我們的收入貢獻約為 540 萬美元。在第一季度的運營中，我們繼續執行去年第四季度實施的幾項成本效率計劃。我們完成了關閉我們的國家填海設施的過程。2019 年第一季度，公司錄得淨虧損 400 萬美元或基本股和稀釋後每股虧損 0.09 美元，而同期淨虧損 310 萬美元或基本股和稀釋後每股虧損 0.07 美元2018.2018 年第一季度淨虧損減少了與 2017 年減稅和就業法案相關的 100 萬美元收益，而 2019 年第一季度沒有確認此類收益。

Our balance sheet is strong with working capital of $59 million, which was slightly lower than past years due to the recent adoption of the change in lease accounting. Inventory at March 31 was $100 million. And as Kevin mentioned earlier, we are now moving through the second quarter of 2019 and into the warmer seasonal weather, so we expect that we'll begin to see more meaningful declines in our overall inventory balances.

我們的資產負債表強勁，營運資金為 5900 萬美元，由於最近採用了租賃會計變更，因此略低於往年。3 月 31 日的庫存為 1 億美元。正如凱文之前提到的，我們現在正進入 2019 年第二季度，進入溫暖的季節性天氣，因此我們預計我們將開始看到整體庫存餘額出現更有意義的下降。

As previously announced, during the fourth quarter of 2018, we secured definitive amendments to our term loan and revolving credit facility and are compliant with our covenants. For the year ended December 31, 2019, the term loan leverage ratio is set at 5.7x, which was derived from slight increases in revenues over 2018, mainly as a result of expected higher volumes in 2019 when compared to 2018.

正如之前宣布的那樣，在 2018 年第四季度，我們獲得了對定期貸款和循環信貸額度的最終修訂，並遵守了我們的契約。截至 2019 年 12 月 31 日止年度，定期貸款槓桿比率設定為 5.7 倍，這是由於收入比 2018 年略有增加，主要是由於預計 2019 年的交易量將高於 2018 年。

During the first quarter of 2019, our unadjusted EBITDA improved over $1 million when compared to the first quarter of '18, and we expect the trend to continue for the rest of 2019, which we expect will allow us to be compliant with our leverage ratio covenant.

在 2019 年第一季度，與 18 年第一季度相比，我們未經調整的 EBITDA 增加了超過 100 萬美元，我們預計這一趨勢將持續到 2019 年剩餘時間，我們預計這將使我們能夠符合我們的槓桿率盟約。

We have strong liquidity and expect to generate more than $20 million in excess cash flow for 2019 period. Lastly, at March 31, 2019, we had approximately $37 million of availability. I'll now turn the call back over to Kevin.

我們擁有強大的流動性，預計 2019 年期間將產生超過 2000 萬美元的超額現金流。最後，在 2019 年 3 月 31 日，我們有大約 3700 萬美元的可用資金。我現在將電話轉回給凱文。

Thanks, Brian. Hudson remains a leader in the refrigerant reclamation business with the expertise, innovative technology and a well-established distribution network necessary to drive growth.

謝謝，布萊恩。Hudson 憑藉推動增長所需的專業知識、創新技術和完善的分銷網絡，仍然是製冷劑回收業務的領導者。

In this growing market, we are confident that we have the right team and possess the necessary tools to capitalize on this large opportunity in front of us.

在這個不斷增長的市場中，我們相信我們擁有合適的團隊並擁有必要的工具來利用我們面前的這個巨大機會。

I'd like to thank you all for your support of Hudson. And now Brian and I and our CFO, Nat Krishnamurti, will take your questions. Operator, please open the call for questions.

我要感謝大家對 Hudson 的支持。現在，我和 Brian 以及我們的首席財務官 Nat Krishnamurti 將回答您的問題。接線員，請打開電話提問。

(Operator Instructions) We are showing no questions at this time. I would now like to turn the call back for closing remarks.

（操作員說明）我們目前沒有顯示任何問題。我現在想轉回結束語的電話。

Operator, keep on trying for Q&A. Is there a technical difficulty?

接線員，繼續嘗試問答。有技術上的困難嗎？

I can have more of a look. One moment.

我可以多看看。一瞬間。

Jen, is there a texting or e-mail mechanism?

珍，有短信或電子郵件機制嗎？

It is enabled. Did you just enable it, operator?

它已啟用。你剛剛啟用它了嗎，接線員？

Yes.

是的。

Okay, could you re-queue, please?

好的，你能重新排隊嗎？

Your first question comes from Steve Dyer with Craig-Hallum.

你的第一個問題來自 Steve Dyer 和 Craig-Hallum。

That's better. Can you guys hear me?

那更好。你們能聽到我說話嗎？

Yes, we got worried there for a minute.

是的，我們在那裡擔心了一分鐘。

I have been hitting *1 for half hour. Couple questions. First of all, within the quarter, I guess, the last several weeks maybe, I guess, second quarter, our checks are suggesting HFC prices potentially spiked here just sort of on speculation around a new antidumping lawsuit. Are you able to comment on that, what you're seeing? If so, how much that could sort of help margins here in the second quarter?

我一直在打 *1 半個小時。幾個問題。首先，在本季度內，我猜，過去幾週，我猜，第二季度，我們的檢查表明 HFC 價格可能會飆升，只是因為圍繞新的反傾銷訴訟的猜測。你能評論一下你所看到的嗎？如果是這樣，這對第二季度的利潤率有多大幫助？

Well, we can say, your channel checks are correct. It did jump in April. But, again, it's all over the place right now. It's really -- certainly, we can never state we think it's sustainable. We don't understand why it jumped to the level it did, it has come back some recently. So it's all -- seems to be all over the place. If it stayed like that, it would have been, yes, very good for the quarter, but there is no sign that it will stay there. So we're just watching it day by day, like probably your are too.

好吧，我們可以說，您的頻道檢查是正確的。它確實在四月份跳了起來。但是，現在又到處都是。這真的——當然，我們永遠不能說我們認為它是可持續的。我們不明白為什麼它跳到現在的水平，它最近又回來了。所以這一切 - 似乎無處不在。如果它保持這種狀態，對本季度來說會非常好，但沒有跡象表明它會保持這種狀態。所以我們只是日復一日地看著它，就像你一樣。

Got it. Okay. And then just as it relates to inventory, I was a little bit surprised to see that it was only down $2 million quarter-over-quarter, obviously, you sold through well more than that. Just curious about your -- sort of your overall philosophy around sort of liquidating down inventory. You didn't appear to be in a big hurry, I guess, this quarter. But just help us frame up how you're thinking about that throughout the rest of the year?

知道了。好的。然後就像它與庫存有關，我有點驚訝地發現它比上一季度僅下降了 200 萬美元，顯然，你的銷售量遠不止於此。只是對你的——關於清算庫存的整體理念感到好奇。我猜，這個季度你似乎並不著急。但是，請幫助我們了解您在今年餘下的時間裡是如何考慮這個問題的？

Yes. So you're correct. And the real reason that we want to be careful about not lowering our inventory as much as we may consider, let's say, at March 31 is because April, May, June should be very strong volume months. So we want to make sure that we are prepared with the proper inventory by refrigerant, by location and so on down the line. So we did not anticipate and normally would not anticipate a material change between Q4 and Q1. I think in other years, and you may have seen at times even a higher balance at March. But based on the way we are managing our inventory, we should expect to see lower dollars in inventory, that probably will be the case in June as well. And certainly, by the third quarter bringing it down to probably the lowest dollar amount. And then bringing it back up to some extent in Q4. But at the end of the day, we should easily achieve more than $20 million of free cash just coming out of inventory for the 2019 period.

是的。所以你是對的。我們要小心不要像我們想像的那樣降低庫存的真正原因是，比方說，在 3 月 31 日是因為 4 月、5 月、6 月應該是銷量非常強勁的月份。因此，我們要確保我們準備好按製冷劑、按位置等分類的適當庫存。所以我們沒有預料到，通常也不會預料到第四季度和第一季度之間會發生重大變化。我認為在其他年份，您有時可能會看到 3 月份的餘額甚至更高。但根據我們管理庫存的方式，我們應該預期會看到較低的庫存美元，6 月份可能也是如此。當然，到第三季度將其降至可能最低的美元數額。然後在第四季度將其恢復到一定程度。但歸根結底，我們應該很容易在 2019 年期間從庫存中獲得超過 2000 萬美元的自由現金。

Okay, got it. And last one from me, and I'll pass it over. A month of the quarter down already. I know you don't like to give too much in the way of forward guidance. But any just general commentary as to what you're seeing in April? I know Minnesota here may not be the best parameter as to if it's warming up or not. But generally are you starting to see the pickup you had hoped for here in the second quarter?

好，知道了。最後一個來自我，我會通過它。本季度已經下降了一個月。我知道你不喜歡在前瞻性指導方面給出太多。但是，關於您在 4 月份看到的情況，有任何一般性評論嗎？我知道這裡的明尼蘇達州可能不是判斷它是否正在熱身的最佳參數。但總的來說，你是否開始在第二季度看到你所希望的皮卡？

Well, I think the good news for all of us is that we still believe inventory levels are low. We definitely feel that the inventory levels by our customers are lower today than they would have been a year ago. So as there is any movement with regards to warm weather in different parts of the country, and definitely certain parts of the country have already warmed up, we are seeing activity. So April, let's just say, seems to be positive, certainly while the pricing on the HFCs maybe temporary, any price increases are generally helpful to us. So, so far things are fine, but obviously, most of the overall demand because much of refrigerant demand that is AC related is going to be when it's warm in Chicago and New York and so forth and that typically won't happen until late May.

好吧，我認為對我們所有人來說，好消息是我們仍然相信庫存水平很低。我們確實感覺到，我們客戶今天的庫存水平低於一年前。因此，由於該國不同地區有任何關於溫暖天氣的動向，而且該國某些地區肯定已經變暖，我們看到了活動。所以 4 月，我們只是說，似乎是積極的，當然，雖然氫氟碳化合物的定價可能是暫時的，但任何價格上漲通常對我們都有幫助。所以，到目前為止一切都很好，但顯然，大部分需求是因為大部分與空調相關的製冷劑需求將出現在芝加哥和紐約等地溫暖的時候，而這通常要到 5 月下旬才會發生.

Your next question comes from Gerard Sweeney with Roth Capital Partners.

你的下一個問題來自 Roth Capital Partners 的 Gerard Sweeney。

Circle back into HFCs and your commentary on the pricing is all over the place. I'm not sure how much you can comment on this, but I want to maybe flush it out a little bit more. It's my understanding there was some type of circumvention of trade case filing from the previous HFC trade case in June of 2016, and specifically naming some Chinese suppliers as well as distributors within the U.S. that had I think traditionally been the lowest price sellers in the country. With potential trade case floating out there and retroactive type of tariffs, any thoughts on what that could do to the market or why you think they're still going to be all over the place?

回到氫氟碳化合物，你對定價的評論到處都是。我不確定你能對此發表多少評論，但我可能想再多說一點。據我了解，在 2016 年 6 月的上一次 HFC 貿易案中，存在某種類型的貿易案備案規避，並特別點名了一些中國供應商和美國境內的分銷商，我認為這些供應商傳統上是該國價格最低的賣家.隨著潛在的貿易案例浮出水面和追溯式關稅，有什麼想法可以對市場造成什麼影響，或者為什麼你認為它們仍然會到處都是？

Well, historically, we have always tried to describe pricing relative to supply-demand. And we know back to 22 for the moment that hasn't always been the case, but that was mainly because we had 3 people controlling 90% of the allocations.

好吧，從歷史上看，我們一直試圖描述相對於供求關係的定價。我們現在知道 22 並非總是如此，但這主要是因為我們有 3 個人控制了 90% 的分配。

With regards to HFCs, there's a lot of volatility and speculation about this case. As the weeks progress and, let's just say, over the next 4 weeks, we should have some initial indication from the ITC as to whether they're even going to proceed. So that in itself could be a gate that changes dynamics and so forth. Also to the extent there is a case, and it gets to the finish line, it could take a year possibly for all that to work itself out. So right now certainly people are reacting to the filing of the case, but we look at some of these things as temporary, not necessarily permanent, and we've seen volatility before around regulation and court cases. And so we're being cautious about where the market really is going to end up.

關於氫氟碳化合物，這個案例存在很多波動和猜測。隨著時間的推移，讓我們這麼說吧，在接下來的 4 週內，我們應該從 ITC 那裡得到一些關於他們是否會繼續進行的初步指示。因此，它本身可能是改變動態等的門。此外，如果有案子，並且到了終點，可能需要一年的時間才能解決所有問題。所以現在人們肯定會對案件的提交做出反應，但我們認為其中一些事情是暫時的，不一定是永久性的，而且我們在監管和法庭案件之前已經看到了波動。因此，我們對市場的真正走向持謹慎態度。

Okay. That's fair. And then also you mentioned, I think, some small increases or marginal increases in R-22. Is that -- who's driving that? Is that from some legacy producers? Or is this just a market-wide type increase, just want to see where that was coming from if possible?

好的。這還算公平。然後你還提到，我認為 R-22 有一些小幅增加或邊際增加。那是誰開的？是來自一些傳統製作人嗎？或者這只是一個市場範圍的增長，如果可能的話，只是想看看它是從哪裡來的？

Well, the producers generally lead the price. So if the price is going to go down, generally the producers will lead it and if prices are going to go up, generally they will lead it. But, again, I think holders of inventory still believe that there is going to be some degree of shortage this year, which, therefore, we would believe that there should be higher prices as we get through the season.

好吧，生產商通常會引領價格。因此，如果價格要下跌，通常生產商會引領，如果價格上漲，通常他們會引領。但是，我認為庫存持有者仍然認為今年會出現某種程度的短缺，因此我們認為隨著季節的推移價格應該會上漲。

Got it. And this -- my channel check had always indicated and -- if I talk to them, they may not have the same customers that you do. But some of them indicated some of the larger purchaser -- some of their larger purchasers in the past have yet to return to the market. They believe they sort of stocked up when things got -- when there was a belief that the market was getting very tight on the R-22. Do you still have some larger guys that have been staying out of the market and if you do, give any indication from them as to when they could return or what their inventory looks like?

知道了。而且這個——我的渠道檢查一直表明——如果我和他們交談，他們可能沒有和你一樣的客戶。但是他們中的一些人表示一些較大的買家 - 他們過去的一些較大的買家尚未返回市場。他們相信，當事情發生時，他們有點儲備——當人們相信市場對 R-22 的需求變得非常緊張時。您是否還有一些大公司一直置身於市場之外，如果有，請告知他們何時可以返回或他們的庫存情況如何？

Well, I think all we've ever really seen is not so much that people stockpiled like to acquire a year or 2's worth of supply because it's less likely that the producers would allow that because the producers will always trying to suggest they will sell to customers based on prior practices and volumes, and not oversell. But what we definitely ran into, as noted by some of your channel checks is in that '17 period when the prices were high, a lot of folks did buy and a lot of folks ended up carrying that high-priced inventory into 2018, and in some respects, because of that they probably didn't sell as much 22 because they were upside down to some extent. It's likely all of that problem is gone by now. So that it's likely that whoever may not have bought last year because they were upside down on inventory, are likely buyers this year. But we never really saw a lot of people that supposedly would have had multiple years of stockpile buying in, let's say, '16 or '17.

好吧，我認為我們所真正看到的並不是人們囤積的人喜歡獲得一年或兩年的供應量，因為生產商不太可能允許這樣做，因為生產商總是試圖建議他們將出售給客戶基於先前的做法和數量，而不是超賣。但是我們確實遇到了，正如你們的一些渠道檢查所指出的那樣，在 17 年價格高的時期，很多人確實購買了，很多人最終將高價庫存帶到了 2018 年，並且在某些方面，正因為如此，他們可能沒有賣出那麼多 22，因為它們在某種程度上是顛倒的。很可能所有這些問題現在都消失了。因此，去年可能因為庫存倒掛而沒有購買的人今年很可能成為買家。但是我們從來沒有真正看到很多人應該有多年的庫存購買，比方說，'16 或 '17。

Got it. And then just one more, and I'll jump back in line. DLA contract. Where are the margins on that even if you can qualitatively provide a little background on what those margins are in that business?

知道了。然後再來一個，我會重新排隊。DLA 合同。即使您可以定性地提供有關該業務中這些利潤率的一些背景，利潤率在哪裡？

We've always said that we felt that the margins in that business would be at about 20%, like a true distribution margin business, the good thing is that the government doesn't buy any legacy refrigerants. The federal government got out of almost all the ODS systems in the early 2000s. So they're mainly buying -- they buy refrigerants, they're mainly HFCs and then generally industrial gas transactions are lower-margin transactions as well. So we still believe that, that's a reasonable number. We certainly would look to try to find ways to get more margin out of that business, but probably won't be overly successful with that.

我們一直說，我們認為該業務的利潤率約為 20%，就像真正的分銷利潤率業務一樣，好消息是政府不購買任何遺留製冷劑。聯邦政府在 2000 年代初退出了幾乎所有的 ODS 系統。所以他們主要購買——他們購買製冷劑，主要是氫氟碳化物，然後通常工業氣體交易也是低利潤交易。所以我們仍然相信，這是一個合理的數字。我們當然會嘗試尋找從該業務中獲得更多利潤的方法，但可能不會太成功。

Got it. You had mentioned 20% before, but I just wanted to double check. So I appreciate that.

知道了。你之前提到過 20%，但我只是想仔細檢查一下。所以我很感激。

(Operator Instructions) Your next question comes from Ryan Merkel with William Blair & Co.

（操作員說明）你的下一個問題來自 Ryan Merkel 和 William Blair & Co。

So first, just want to clarify on R-22 prices. Are you saying that the reason the prices are $90 today, is that because the OEMs are influencing supply either from stockpile and, I guess, still some modest virgin production? You don't think it's a demand issue. It doesn't sound like you think it's necessarily a downstream supply problem. So am I understanding that right?

所以首先，只想澄清一下 R-22 的價格。你是說今天價格是 90 美元的原因是因為原始設備製造商正在影響供應，要么來自庫存，要么是一些適度的原始生產？你不認為這是一個需求問題。聽起來不像你認為這一定是下游供應問題。那我的理解對嗎？

That's correct. And we do know that these OEMs do have a stockpile, although we think 1 producer may be out of the stockpile now and out of their allocation for this year. But that leaves 2 more remaining.

這是正確的。我們確實知道這些原始設備製造商確實有庫存，儘管我們認為 1 個生產商現在可能沒有庫存並且沒有他們今年的分配。但這還剩下 2 個。

Okay. Because I was a little surprised to hear your thought that R-22 prices could rise later this year as maybe supply-demand actually comes into balance, or I guess, imbalance. So you're leaving that as a possible scenario. But by 2020, with this uncertainty, we think that could be the latest that R-22 prices sort of normalize?

好的。因為聽到您認為 R-22 價格可能會在今年晚些時候上漲，因為供需實際上可能達到平衡，或者我猜是不平衡，我感到有些驚訝。所以你把它作為一種可能的情況。但到 2020 年，由於這種不確定性，我們認為這可能是 R-22 價格正常化的最新情況？

Well, whenever we were trying to game out the overall demand and game out the stockpile, we always felt that somewhere around late '18 into '19 would be the period that the stockpile would go away. Now we do believe the replacement rates are slightly higher than what we originally thought, like closer to 7%, then, let's say, 5% to 7% based on the JPMorgan data that we've seen. But we definitely still feel that if it doesn't happen this year, then next year for sure the stockpile should be gone.

好吧，每當我們試圖計算出整體需求併計算出庫存時，我們總是覺得 18 年底到 19 年左右的某個時間段將是庫存消失的時期。現在我們確實相信替代率略高於我們最初的想法，比如接近 7%，然後，根據我們看到的摩根大通數據，可以說是 5% 到 7%。但我們肯定仍然認為，如果今年不發生這種情況，那麼明年肯定會沒有庫存。

Okay. And then I haven't asked this question in a while and I'm not sure where we stand. But sticking with R-22, are you primarily selling reclaimed gas at this point? Are you selling any virgin R-22 at all?

好的。然後我有一段時間沒有問這個問題了，我不確定我們的立場。但是堅持使用 R-22，此時您主要銷售再生氣嗎？您是否出售任何原始 R-22？

We're probably at the point where we're selling very little virgin gas.

我們可能正處於銷售非常少的原始天然氣的地步。

Okay, that's what I was thinking. Okay, and then just lastly, I think gross margins are tracking so far versus what you thought pretty accurately. So as we get into the season, are you still comfortable with sort of mid-20s gross margin, is that still an achievable target?

好吧，我就是這麼想的。好的，最後，我認為到目前為止，毛利率與您的想法相當準確。所以當我們進入這個季節時，你是否仍然對 20 多歲的毛利率感到滿意，這仍然是一個可以實現的目標嗎？

Yes, yes, this is Nat Krishnamurti here. Yes, we are comfortable with low to mid-20s at this point for the rest of the year.

是的，是的，這裡是 Nat Krishnamurti。是的，在今年餘下的時間裡，我們對 20 歲左右的人感到滿意。

Thank you. There are no further questions at this time. I would like to turn the floor back over to Kevin for closing comments.

謝謝。目前沒有其他問題。我想將發言權轉回給 Kevin 以發表結束評論。

Well, I would like to thank all of our employees, our long-time shareholders, and those that recently joined us for their support. Thanks, everyone, for participating in today's call, and we look forward to speaking with you after the second quarter results. Thank you.

好吧，我要感謝我們所有的員工、我們的長期股東，以及那些最近加入我們的人的支持。感謝大家參加今天的電話會議，我們期待在第二季度業績公佈後與您交談。謝謝。