Hudson Technologies Inc (HDSN) 2024 Q3 法說會逐字稿

Greetings, welcome to the Hudson Technologies Third Quarter, 2024 Earnings Call.

大家好，歡迎參加 Hudson Technologies 2024 年第三季財報電話會議。

(Operator Instructions) Please note this conference is being recorded. I will now turn the conference over to your host, Jen Belodeau. You may begin.

（操作員說明）請注意，本次會議正在錄製中。現在我將會議交給主持人 Jen Belodeau。你可以開始了。

Thank you. Good evening and welcome to our conference call to discuss Hudson Technologies financial results for third quarter, 2024. On the call today are Brian Coleman, President and Chief Executive Officer; and Brian Bertaux, Hudson's new Chief Financial Officer.

謝謝。晚上好，歡迎參加我們的電話會議，討論 Hudson Technologies 2024 年第三季的財務表現。今天參加電話會議的是總裁兼執行長布萊恩‧科爾曼 (Brian Coleman)；以及 Hudson 新任財務長 Brian Bertaux。

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.

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聲明。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，並且基於我們今天對行業和業務的最佳看法，但它們並不能保證未來的業績。

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 other way, I will turn the call over to Brian Coleman. Go ahead, Brian.

請理解，這些陳述涉及許多風險和假設，因為這些因素可能會發生變化，並且在某些情況下不在我們的控制範圍內。我們要求您從這個角度考慮和解釋它們。我們強烈建議您查看Hudson 最新的10-K 表格和其他後續向SEC 提交的文件，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與其他方式存在重大差異的因素，我會將電話轉給布萊恩科爾曼。繼續吧，布萊恩。

Well, good evening and thank you for joining us. As we mentioned on our second quarter earnings call, the third quarter of 2024 included several industry developments, including the EPA S issuance of the final refrigerant management rule and the release of the 2023 reclamation and inventory data collected from industry participants as of December 31st 2023.

嗯，晚上好，感謝您加入我們。正如我們在第二季財報電話會議上所提到的，2024 年第三季包括多項產業發展，包括EPA S 發布的最終冷媒管理規則以及發布截至2023 年12 月31 日從產業參與者收集的2023 年回收和庫存資料。

Additionally, the third quarter marks the close of our nine month selling season and we have some pricing data to share.

此外，第三季標誌著我們九個月的銷售季節的結束，我們有一些定價數據可以分享。

We'll get into the industry data points and our outlook moving forward a little later in the call. But first, I will provide some color around our quarterly results.

我們將在稍後的電話會議中討論行業數據點和我們的前景展望。但首先，我將提供有關我們季度業績的一些資訊。

As you know, the 2024 cooling season was challenging in the third quarter revenue decrease, primarily related to decreased prices for certain refrigerants as well as slightly lower revenue from our DL A contract as compared to the third quarter of last year.

如您所知，2024 年冷凍季節面臨挑戰，第三季收入下降，主要與某些冷媒價格下降以及我們的 DL A 合約收入較去年第三季略有下降有關。

To provide some perspective around the pricing dynamic at the close of the third quarter of 2024, HC prices had declined an additional 20% from the pricing levels we reported on our second quarter, 2024 call to approximately $6 per pound.

為了提供有關 2024 年第三季末定價動態的一些視角，HC 價格比我們在 2024 年第二季電話會議上報告的定價水準額外下降了 20%，至每磅約 6 美元。

There are several types of HFCs. So the pricing for anyone might be different than others. When we talk about the price of HF Cs, we're generally focused on the price of HC R-410A which represents about 70% of the total aftermarket demand for HO CS.

HFC 有多種類型。因此，每個人的定價可能與其他人不同。當我們談論 HF Cs 的價格時，我們通常會關注 HC R-410A 的價格，它約佔 HO CS 售後市場總需求的 70%。

By way of context HC for today was the most price competitive HC during the sales season. While other HC pricing was not as volatile.

就上下文而言，今天的 HC 是銷售季節中最具價格競爭力的 HC。而其他 HC 的定價則沒有那麼波動。

While this season's pricing dynamic is disappointing in the near term pricing, trends are only one element of our business model and we remain confident that the ongoing phase out of H CS will ultimately move prices higher as demand for HC. Refrigerants begin to outstrip supply.

雖然本季的定價動態在近期定價方面令人失望，但趨勢只是我們業務模式的一個要素，我們仍然相信，隨著對 HC 的需求的增長，HC CS 的持續淘汰最終將導致價格走高。冷媒開始供不應求。

We said many times that we don't believe it's a question of if HC price pricing increases, it's more a question of when HC pricing will increase.

我們多次說過，我們不認為HC定價是否上漲的問題，更多的是HC定價何時上漲的問題。

Additionally, with our longstanding industry relationships and reclamation capabilities, we are well positioned to fill the expected increase in demand for reclaimed refrigerants as virgin production is curtailed by the ongoing HSC phase out.

此外，憑藉我們長期的行業關係和回收能力，我們有能力滿足再生冷媒需求的預期成長，因為正在進行的 HSC 淘汰導致原始產量減少。

We are committed to executing our long term growth strategy to capitalize an HSC phase down and the expected corresponding growth and demand for reclaimed refrigerants while pricing pressure in the quarter impacted our gross margin performance. We achieved solid profitability.

我們致力於執行我們的長期成長策略，以充分利用 HSC 的逐步減少以及再生冷媒的預期相應成長和需求，同時本季的定價壓力影響了我們的毛利率表現。我們實現了穩健的獲利。

However, with our visibility today, we are adjusting our expectations for full year revenue, which we expect to be at the low end of our prior guidance range and a full year gross margin of approximately 28%.

然而，鑑於我們今天的可見性，我們正在調整對全年收入的預期，我們預計全年收入將處於先前指導範圍的低端，全年毛利率約為 28%。

It should be noted that the fourth quarter gross margin is expected to be traditionally lower than the Q3, which is consistent with last year due to lower volumes related to seasonality.

值得注意的是，由於季節性相關的銷量下降，預計第四季度的毛利率傳統上將低於第三季度，這與去年一致。

As many of you know, the cooling and refrigerant industry has been continuous, continuously transitioning to drive the development and use of lower GDP refrigerants and equipment.

正如許多人所知，冷卻和冷媒產業一直在不斷轉型，以推動 GDP 較低的冷媒和設備的開發和使用。

During the third quarter, the EPA issued its final refrigerant management rule which is the third important pillar from the Aim Act with a primary focus on reducing leak rates and promoting growth and reclamation.

第三季度，美國環保署發布了最終的冷媒管理規則，這是《目標法案》的第三個重要支柱，主要重點是降低洩漏率並促進成長和回收。

Among other directors. The final rule mandates the use of reclaim refrigerants for servicing certain sectors of the market beginning in 2029 which we view as a positive step in driving the industry's broader use of reclaim refrigerants.

其他董事之中。最終規則要求從 2029 年開始使用回收冷媒為某些市場領域提供服務，我們認為這是推動業界更廣泛使用回收冷媒的積極一步。

Our industry does not have reclamation without a technician choosing to recover the refrigerant during a service call or end of life of the equipment.

如果沒有技術人員在服務呼叫或設備壽命結束期間選擇回收冷媒，我們的產業就不會進行回收。

Hudson currently pays for recovery refrigerant and we have placed an emphasis on promoting best practices for recovery during technician training.

哈德遜目前支付回收冷媒的費用，我們強調在技術人員培訓期間推廣回收的最佳實踐。

We believe the implementation of a mandate for the use of reclaim refrigerants establishes a message to technicians that the practice of venting refrigerants is not sustainable.

我們認為，強制執行使用回收冷媒的規定向技術人員傳達了這樣一個訊息：排放冷媒的做法是不可持續的。

The current installed base of HFC equipment has a potential operational life of approximately 20 years.

目前已安裝的 HFC 設備的潛在使用壽命約為 20 年。

So if technicians want to serve their customers for the long run, then they must recover and not vent. The refrigerants.

因此，如果技術人員想要長期為客戶服務，那麼他們必須恢復而不是發洩。冷媒.

This rule represents the first time in our history that the federal, it creates a federal requirement for the mandatory use of reclaim refrigerants in certain sectors.

該規則是我們歷史上第一次，聯邦制定了在某些行業強制使用回收冷媒的聯邦要求。

We are also seeing favorable legislative activity on a state by state basis, led by California, which is currently implementing laws to limit the sale and use of high GP refrigerants.

我們還看到以加州為首的各州都開展了有利的立法活動，該州目前正在實施限制高 GP 冷媒銷售和使用的法律。

And we will also implement a mandate for the use of reclaim refrigerants in state government buildings in 2025. New York and Washington State also have legislation pending and more states are expected to follow.

我們也將在 2025 年強制要求州政府大樓使用回收冷媒。紐約州和華盛頓州也有待立法，預計更多州也會跟進。

Additionally, the EPA recently provided industry reclamation data for 2023 which showed an increase of approximately 7% in the terms of all refrigerants reclaimed as compared to 2022. This includes CF CS, HCF, CS and HF CS.

此外，美國環保署 (EPA) 最近提供了 2023 年的產業回收數據，該數據顯示，與 2022 年相比，回收的所有冷媒數量增加了約 7%。這包括 CF CS、HCF、CS 和 HF CS。

If we isolate HFCs reclaimed pounds grew by approximately 20% in 2023 as compared to 2022.

如果我們單獨考慮氫氟碳化合物，2023 年的回收重量將比 2022 年增加約 20%。

So we're pleased to see the growth in reclaim and we're committed to working with our industry partners to redouble our efforts to establish greater recovery practices. That will drive meaningful increases in reclaim activity in future years.

因此，我們很高興看到回收量的成長，並致力於與產業合作夥伴合作，加倍努力，建立更好的回收實踐。這將推動未來幾年回收活動的大幅成長。

DP also chose to provide recover pounds data by reclaimer which it has never previously provided.

DP 還選擇提供回收商回收磅數的數據，這是它以前從未提供過的。

It should be noted that in this reporting, we are listed as the second largest in recovered pounds.

應該指出的是，在本報告中，我們被列為回收磅數第二大的公司。

We are looking to get some more clarity around this data. But for years, recovered pounds have exceeded reclaim by over 2 million pounds per year or by approximately 30 million pounds over the past five years.

我們希望更清楚地了解這些數據。但多年來，回收的磅數每年超過回收量超過 200 萬磅，在過去五年中超過回收量約 3,000 萬磅。

We believe individual organizations may have different approaches to the use of recover pounds. They report some will report recovered pounds that they will go on to reclamations such as Hudson, others may report recover pounds and they'll stockpile those pounds.

我們相信各個組織可能有不同的方法來使用恢復磅。他們報告說，有些人會報告回收的磅數，他們將繼續進行哈德遜等填海工程，其他人可能會報告回收的磅數，然後他們會儲存這些磅數。

Still others may report recover pounds that they will destroy further complicating the data is that one reclaimer could purchase recovered pounds from another reclaimer that did not reclaim the pounds but previously reported those pounds as recovered in that scenario. Two different reclaimers may be reporting the same pound twice for the most part, Hudson only recovers pounds that we reclaim.

還有一些人可能會報告回收的磅數，他們將銷毀這些磅數，這使數據進一步複雜化，因為一個回收商可以從另一回收商那裡購買回收的磅數，該回收機沒有回收這些磅數，但之前報告了在這種情況下回收的磅數。大多數情況下，兩個不同的回收商可能兩次報告相同的磅數，Hudson 只回收我們回收的磅數。

All that said, according to the EPA report, our total market share for HC reclaim pounds for 2023 is in the 20% plus range with our R-410A at approximately 25%.

儘管如此，根據 EPA 報告，我們 2023 年 HC 回收磅的總市佔率在 20% 以上，而我們的 R-410A 約為 25%。

And for the moment is unclear whether a certain amount of the recovered HC stockpile from the prior periods is finally being reclaimed, thereby inflating the 2023 total reclaim pounds from prior year activity.

目前尚不清楚前期回收的一定數量的碳氫化合物庫存是否最終被回收，從而誇大了上一年活動的 2023 年回收總量。

If that was the case, then Hudson's activities would not include any one time windfall for the processing of stockpile recovery refrigerant.

如果是這樣的話，那麼哈德遜的活動將不包括處理庫存回收冷媒的任何一次性意外之財。

While in the past tracking the recovery pounds was never a concern of Hudson, we will be spending more time analyzing this recovered data in the context of what we're seeing in the marketplace to get a clearer picture of the current recovered to reclamation data.

雖然在過去，Hudson 從來不關心追蹤回收磅數，但我們將花更多時間根據我們在市場上看到的情況來分析這些回收的數據，以便更清楚地了解當前回收的回收數據。

Finally, during the third quarter, the EPA also gave a snapshot of where inventory levels were as of December 31, 2023, year end inventory levels give us a sense of how the ongoing limitations of the virgin consumption are impacting supply.

最後，在第三季度，美國環保署還提供了截至 2023 年 12 月 31 日的庫存水準快照，年終庫存水準讓我們了解了原始消費的持續限制如何影響供應。

As we move through any phase down, we would anticipate that production limitations will begin to limit year end inventory as the Band begins to begin, surpass supply. At December 31st 2022, total reported HC inventory was 388 million metric tons of CO2eE.

當我們經歷任何階段性削減時，我們預計，隨著樂隊開始開始，生產限制將開始限制年終庫存，超過供應。截至 2022 年 12 月 31 日，報告的 HC 庫存總量為 3.88 億噸 CO2eE。

At the end of the year when HC consumption have been good [pair per tail to 90% of the Cap]. At December 31, 2023 the 2nd year of consumption at 90% of the Cap HSC inventory levels closed the year at 378 million metric tons of CO2e E.

年底HC消費情況良好[每條尾巴對到上限的 90%]。截至 2023 年 12 月 31 日，第二年消耗量達到 Cap HSC 庫存水準的 90%，該年結束時二氧化碳當量 E 為 3.78 億噸。

While inventory levels are moving in the right direction, we are a bit disappointed by the rate of decline in inventory levels which would eventually lead to a supply demand imbalance as consumption allowances met demand in 2022 and 2023.

雖然庫存水準正朝著正確的方向發展，但我們對庫存水準的下降速度感到有點失望，這最終將導致供應需求失衡，因為消耗配額將在 2022 年和 2023 年滿足需求。

In 2024 consumption allowances were reduced to provide for 60% of the original Cap. And we're optimistic that we'll see a lowering in inventory balances at the end of this year.

2024 年，消費補貼減少至原上限的 60%。我們樂觀地認為，今年底庫存餘額將會下降。

But we are concerned that the combination of inventory levels with the annual consumption allowances will not decline in the 2025 to 2028 period sufficiently relative to demand in those periods. Unless a petition is filed with the EPA to lower consumption allowances in those years.

但我們擔心，2025 年至 2028 年期間，庫存水準與年度消耗配額的組合相對於該時期的需求不會充分下降。除非向美國環保署提交請願書以降低當年的消費限額。

The primary reason for this observation is that next year, we're entering a period of OEN demand shift to lower GWP systems and they therefore need less metric tons of CO2e of refrigerants to meet that demand. In early September Hudson partnered with the Rocky Mountain Institute or RMI to publish a report that found that greenhouse gas emissions can be reduced by up to 70% on a per pound basis through the use of reclaim, refrigerant versus producing and using new manufactured virgin R R-410A refrigerant.

這項觀察結果的主要原因是，明年，我們將進入 OEN 需求轉向較低 GWP 系統的時期，因此他們需要更少的 CO2e 冷媒來滿足該需求。9 月初，Hudson 與落基山研究所(Rocky Mountain Institute) 或RMI 合作發布了一份報告，發現與生產和使用新製造的原始R 相比，透過使用回收材料、冷媒，每磅溫室氣體排放量可減少高達70% R-410A 冷媒。

As the availability of HFCs decreases to meet EPA phase out goals. Reclamation will be essential to meeting demand for existing systems, limiting market disruptions, ensuring a smooth transition for consumers and providing a significant reduction to GWP.

為了滿足 EPA 逐步淘汰的目標，氫氟碳化物的供應量不斷減少。回收對於滿足現有系統的需求、限制市場幹擾、確保消費者平穩過渡以及大幅降低全球升溫潛勢值至關重要。

We are pleased to have had the opportunity to support RM I in publishing their report which illustrates the significant role refrigeration reclamation plays in protecting our environment.

我們很高興有機會支持 RM I 發布他們的報告，該報告說明了製冷回收在保護我們的環境中發揮的重要作用。

We also believe that this report will stimulate users of refrigerants to choose reclaimed refrigerant over virgin on a voluntary basis. In addition to any regulatory mandates to achieve emissions goals, Hudson is a leading provider of all refrigerants and we remain focused on achieving the high operational execution that ensures we are meeting our customer needs through refrigerant sales, as well as through our servicing and reclamation capabilities.

我們也相信，這份報告將刺激冷媒使用者自願選擇再生冷媒而不是原始冷媒。除了實現排放目標的任何監管要求外，哈德森還是所有冷媒的領先供應商，我們仍然致力於實現高營運執行力，確保我們透過冷媒銷售以及我們的服務和回收能力滿足客戶需求。

Through every evolution or industry and we've been through several. Our primary goal has been to facilitate a smooth transition for our customers while also being a proponent for sustainable refrigerant management as our industry moves to more efficient equipment and lower GP refrigerants.

我們經歷過每一次的演變或行業。我們的主要目標是促進客戶順利過渡，同時隨著我們的行業轉向更有效率的設備和更低的 GP 冷媒，我們成為永續冷媒管理的支持者。

Now I turn the call over to Brian Bertaux to review our third quarter financial results.

現在，我將電話轉給布萊恩貝爾托 (Brian Bertaux)，讓他審查我們第三季的財務表現。

Thank you, Brian and good evening everybody. Now I'll turn to the review of our third quarter, 2024 financial results with comparisons to the 2023 3rd quarter results.

謝謝你，布萊恩，大家晚上好。現在我將回顧 2024 年第三季的財務業績，並將其與 2023 年第三季的業績進行比較。

Hudson recorded $61.9 million in revenue in the 2024 quarter at 19% decrease from last year's quarter. The decrease was related to lower refrigerant market prices and lower revenue from the company's DL A contract.

Hudson 2024 年季度營收為 6,190 萬美元，比去年同期下降 19%。這一下降與冷媒市場價格下降以及公司 DL A 合約收入下降有關。

As a reminder, our 2023 DLA revenue was higher than normal due to certain non-recurring purchases making for a tough year-over-year comp. Gross margin was 26% for the 2024 quarter compared to 40% in last year's quarter. Reflecting the low refrigerant market prices.

提醒一下，由於某些非經常性採購導致同比比較困難，我們 2023 年的 DLA 收入高於正常水準。2024 年季度的毛利率為 26%，而去年同期為 40%。反映出冷媒市場價格較低。

SG&A was $8.1 million this quarter compared to 6.8 million in last year's quarter. The increase in SG&A includes higher personnel costs and professional fees.

本季的 SG&A 為 810 萬美元，去年同期為 680 萬美元。SG&A 的增加包括更高的人員成本和專業費用。

We recorded operating income of $7 million in the 2024 quarter compared to $23.1 million in last year's quarter, we recognized $2.3 million in nonrecurring other income in the 2024 quarter, which was primarily related to a litigation settlement.

我們在 2024 年季度的營業收入為 700 萬美元，而去年同期為 2,310 萬美元。

The company recorded net income of $7.8 million or 17¢ per diluted share in the 2024 quarter compared to $13.6 million or 29¢ per diluted share in last year's quarter.

該公司 2024 年季度的淨利潤為 780 萬美元，即稀釋後每股收益 17 美分，而去年同期為 1,360 萬美元，即稀釋後每股收益 29 美分。

We strengthened our unlevered balance sheet ending the quarter with $56.5 million in cash and no debt.

截至本季末，我們加強了無槓桿資產負債表，現金為 5,650 萬美元，無債務。

As previously reported, our capital allocation strategy is focused on organic and strategic growth as well as share repurchases. During the third quarter, we repurchased $2.6 million in common stock.

如前所述，我們的資本配置策略著重於有機成長和策略成長以及股票回購。第三季度，我們回購了 260 萬美元的普通股。

In support of our capital allocation strategy, the company's board of directors recently approved and increased our share repurchase program, thereby doubling the amount of repurchases that we can make. Hudson may now purchase up to $20 million of shares of its common stock consisting of up to $10 million during each of calendar year, 2024 and 2025.

為了支持我們的資本配置策略，公司董事會最近批准並增加了我們的股票回購計劃，使我們可以進行的回購數量增加了一倍。Hudson 現在可以在 2024 年和 2025 年每年購買最多 2000 萬美元的普通股，其中價值最多 1000 萬美元。

Finally, I would like to reiterate our expectations for full year revenue to be at the low end of our prior guidance range with full year gross margin of approximately 28%. Noting that fourth quarter gross margin is typically a low mark for the year due to lower volumes related to seasonality. I will now turn the call back over to Brian.

最後，我想重申我們對全年收入的預期為先前指導範圍的低端，全年毛利率約為 28%。值得注意的是，由於季節性相關的銷售量下降，第四季度的毛利率通常處於全年較低水準。我現在將把電話轉回給布萊恩。

Thank you, Brian.

謝謝你，布萊恩。

I'd like to re emphasize that despite the challenging 2024 selling season, our view of the company's long term growth opportunity has not changed as the ongoing HSC phase down continues. We are confident that HSC pricing will ultimately move higher.

我想再次強調，儘管 2024 年銷售季節充滿挑戰，但隨著 HSC 逐步減少的持續，我們對公司長期成長機會的看法並沒有改變。我們相信 HSC 定價最終會走高。

We also believe that higher pricing of HFC'S along with the mandated use of reclaim, refrigerant will advance the industry's embrace of recovery and reclamation activity and create enhanced profitability in our business.

我們也相信，HFC 的更高定價以及強制使用回收冷媒將推動產業接受回收和回收活動，並提高我們業務的獲利能力。

Hudson has the long standing customer base national footprint and proprietary reclamation technology to continue to grow our leadership role as our industry embraces new cooling technologies and refrigerants.

哈德森擁有全國範圍內的長期客戶群和專有的回收技術，隨著我們的行業採用新的冷卻技術和冷媒，我們將繼續增強我們的領導地位。

And we look forward to capitalizing on the opportunities ahead of us.

我們期待著利用我們面前的機會。

Operator will now open the call to questions.

接線員現在將開始提問。

Thank you. At this time, we will be conducting a question and answer session. (Operator Instructions)

謝謝。此時，我們將進行問答環節。（操作員說明）

The first question comes from Ryan Sigdahl with Craig-Hallam. Please proceed.

第一個問題來自 Ryan Sigdahl 和 Craig-Hallam。請繼續。

Hey, Brian, I'm Ryan. Good afternoon.

嘿，布萊恩，我是瑞安。午安.

You continue to reiterate, I guess you expect pricing to move higher over time. But Brian, you alluded to the ending 2023 inventory which we agree with was fairly lackluster being down only 2% year-over-year and likely needing a petition to the EPA to accelerate that phase on. So I guess if we don't get that petition and EPA to accelerate it, we're looking at lower prices for longer and, and probably not seeing the imbalance until we get that big step down in 2029?

您繼續重申，我猜您預計價格會隨著時間的推移而走高。但布萊恩，你提到 2023 年末的庫存量相當低迷，同比僅下降了 2%，我們同意這一點，並且可能需要向 EPA 提交請願書來加速這一階段的進程。因此，我想，如果我們沒有收到請願書和 EPA 來加速這一進程，我們就會在更長的時間內考慮降低價格，並且可能直到 2029 年大幅降低價格才看到不平衡現象？

I mean, it's certainly a possibility. We don't know what 2024 will hold. The 2024 demand should have been similar to 2023. So we would expect some amount of reduction to that total inventory amount.

我的意思是，這當然有可能。我們不知道 2024 年會發生什麼事。2024 年的需求應該與 2023 年類似。因此，我們預期庫存總量將會減少。

But back to, as I said, in my prepared remarks, we're concerned that the allowance structure for 25 through 28 could be allowing for additional allowances relative to demand for those periods due to the shifting of the OEM demand on lower G to p refrigerants which means they're going to use lower amounts of a metric ton of CO2e E relative to a pound to pound comparison.

但回到我在準備好的發言中所說的，我們擔心 25 至 28 的津貼結構可能會允許相對於這些時期的需求提供額外的津貼，因為 OEM 需求轉向較低的 G 到 p製冷劑，這意味著相對於每磅的比較，他們將使用更少的一公噸CO2e E。

So there's still pieces to the puzzle that we don't know. And certainly we know better going into next year, but we do want to indicate our concern for that period and we certainly would be supporting the concept of lowering the consumption allowances for the balance of through the 28 period.

所以這個謎題仍然有一些我們不知道的部分。當然，我們對明年的情況更加了解，但我們確實想表明我們對該時期的擔憂，並且我們當然會支持在 28 年期間降低消費補貼的概念。

Just to follow up, Brian, what I guess entails that petition process. Can you give us a little more color on that? What would need to happen?

布萊恩，我想跟進請願程序。你能為我們提供更多的資訊嗎？需要發生什麼？

Well, think of it like a challenge to the EPA. Someone would have to put forth a rationale as to why with specific evidence and certainly possibly the inventory data would be that evidence for a reduction of the annual consumption allowances, even in light of the fact that they've already, you know, potentially issued those, meaning they prepare a rule for 24 to 28 which said they would keep the consumption allowances constant over time. It still could be challenged and then therefore amended.

好吧，把它想像成對美國環保署的挑戰。有人必須提出一個理由，說明為什麼用具體的證據，當然也可能是庫存數據，來作為減少年度消費津貼的證據，即使考慮到他們已經，你知道，可能發放的事實這些，意味著他們為24 至28 準備了一條規則，表示他們將隨著時間的推移保持消費津貼不變。它仍然可能受到質疑並因此被修改。

When you look to Europe, Europe has gone through a process and in some instances have lowered the annual allowances relative to what the minimum level are. And back to this point when you look at the chart that might be, you might find an investor presentation and you see the step down over the periods, that's the minimum that the EPA could do, they can in fact go lower.

當你看看歐洲時，歐洲已經經歷了一個過程，在某些情況下已經將年度津貼相對於最低水準降低了。回到這一點，當你查看圖表時，你可能會發現投資者的演示，你會看到各個時期的下降，這是 EPA 可以做的最低限度，他們實際上可以走得更低。

But in this instance, since they've already issued the 24 to 28 rule, a petition would be the methodology to see to seek a lowering of the annual consumption.

但在這種情況下，由於他們已經發布了 24 至 28 規則，請願書將成為尋求降低年度消耗量的方法。

Very good. Moving over to USA refrigerants, the acquisition, you just closed. What are you seeing there from an integration standpoint? And then are you seeing what you hope to see from an accelerant on the recovery of refrigerant to the fuel into your reclamation process?

非常好。轉向美國冷媒，收購剛結束。從整合的角度來看，您看到了什麼？那麼您是否看到了您希望從促進劑將冷媒回收到回收過程中的燃料中看到的效果？

Well, the integration is going extremely well and really on two fronts where they're bringing in some new customers to sell refrigerants to but also given us additional sources to bring in reclaim refrigerant. So we're seeing that working well on both fronts and some very good strategic sources of reclaim refrigerant.

嗯，整合進展非常順利，實際上在兩個方面，他們引入了一些新客戶來銷售冷媒，同時也為我們提供了額外的來源來引入回收冷媒。因此，我們看到這兩個方面都運作良好，並且有一些非常好的回收冷媒策略來源。

And maybe to add. We now are past the point of, you know, integration and really now including the strategies applied historically by USA to strategies to Hudson's existing customer base.

也許還要補充一下。我們現在已經過了整合的階段，現在真正將美國歷史上應用的策略納入哈德遜現有客戶群的策略中。

So, one of the things that we had hoped for with regards to the air gas acquisition was with their extensive customer base to be able to grow our ability to receive more recovery gas with the addition of the USA team, we're now being able to execute into the Hudson customer base, particularly that customer base that was acquired in the Airgas acquisition.

因此，我們在收購空氣氣體方面所希望的一件事是，透過他們廣泛的客戶群，能夠透過增加美國團隊來提高我們接收更多回收氣體的能力，我們現在能夠深入哈德遜客戶群，特別是在收購Airgas 時獲得的客戶群。

Thanks and one quick one, what was the litigation settlement gain related to?

謝謝，快說一句，訴訟和解收益與什麼有關？

It was really related to a commercial dispute and settled at the end of the quarter.

這確實與商業糾紛有關，並在季度末得到解決。

Turn it over the others. Good luck guys.

把它翻到其他的上面。祝大家好運。

Austin Muller, Canaccord Genuity.

奧斯汀·穆勒，Canaccord Genuity。

Hi, good evening. So just my first question here. It sounds like the depletion rate in the 2023 inventory has been slower than anticipated. So, would you expect any uptick in pricing during that 2025 Q3 to Q2 to Q3 cooling season, maybe like 1 to $2 per pound?

嗨，晚上好。這只是我的第一個問題。聽起來 2023 年庫存的消耗速度比預期慢。那麼，您預計 2025 年第三季到第二季到第三季的冷卻季節期間價格會上漲，可能是每磅 1 到 2 美元？

It, it's very, very difficult to prognosticate pricing. And frankly, when you reflect on this particular year's cooling season, we saw a greater decline than we ever anticipated. And so at some point, we're going to hit a floor, are we at the floor or not? We don't know.

預測定價非常非常困難。坦白說，當你回顧今年的冷卻季節時，我們發現下降幅度比我們預期的要大。所以在某個時刻，我們會觸底，我們是否觸底？我們不知道。

But back to, let's say increases in price, we think that it's important that we rely more on supply demand, economics as opposed to allowance holders acting in a particular way relative to price. So the biggest price pressure HSC refrigerant is for 10 A. It appears from the inventory data, there's a significant amount of 125 and 32 and those are the two components that are necessary to build for 10 A.

但回到價格上漲，我們認為重要的是我們更依賴供給需求和經濟，而不是配額持有者以相對於價格的特定方式行事。因此，HSC 冷媒價格壓力最大的是 10 A。

So we are concerned that we're going to enter next year with similar pricing dynamics that we exited this year.

因此，我們擔心明年進入時的定價動態與今年退出時類似。

Okay. That's helpful. And when do you expect to see accretion on gross margins within your revenue mix to get back to your 35% long term target? I guess just how should we think about the timing and cadence of that recovery?

好的。這很有幫助。您預計收入組合中的毛利率何時會增加，以回到 35% 的長期目標？我想我們該如何考慮復甦的時機和節奏？

Again, given the uncertainty and the pricing dynamics in this market, we would say that the 30% is probably a little bit further out until we see an increase in market prices. We do have some lower cost inventory pools we pull against moving forward, but it also has to be complemented by higher market prices to be able to get back to that target gross margin range.

同樣，考慮到這個市場的不確定性和定價動態，我們會說 30% 可能有點遠，直到我們看到市場價格上漲。我們確實有一些成本較低的庫存池，我們無法繼續推進，但它也必須得到更高的市場價格的補充，才能回到目標毛利率範圍。

Understood.

明白了。

Matthew Moss, B Riley.

馬修·莫斯，B·萊利。

Hi, thanks for taking my questions. It's Matthew calling in for Josh Nichols. I just have a quick question.

您好，感謝您回答我的問題。是馬修打電話給喬許·尼科爾斯。我有一個簡單的問題。

So you mentioned revenue from the DL A contract being down year-over-year, so I was wondering how much revenue came from the DL A contract this third quarter and what your expectations are for the year compared to those that you laid out earlier this year?

所以你提到 DL A 合約的收入同比下降，所以我想知道第三季 DL A 合約的收入有多少，以及與你今年早些時候列出的相比，你對今年的預期是多少年？

Yes. So we had mentioned a few times now that there were certain, we called it surge buying under DL A contract that occurred in 2023 that we didn't necessarily think could occur in 2024. Not that they can't, it's just that relative to managing the contract, it was unusual relative to historical perspective.

是的。因此，我們已經多次提到，我們稱之為 2023 年發生的 DL A 合約下的激增購買，但我們認為 2024 年不一定會發生。並不是說他們不能，只是相對於管理合約而言，從歷史角度來看這是不尋常的。

For the quarter, the DL A revenues were approximately $9 million. So they're running at that rate that we try to, you know, guide to as a mid 30 or low 30 million annual revenue versus the 50 plus million in annual revenue that we achieved in 2023.

該季度 DL A 營收約為 900 萬美元。因此，他們的運行速度是我們試圖引導的年收入在 30 多萬或 3000 萬左右，而我們在 2023 年實現的年收入是 50 多萬。

Got it. Yeah. Okay, cool. That was helpful. Thank you for taking my question.

知道了。是的。好吧，酷。這很有幫助。感謝您回答我的問題。

We have reached the end of the question and answer session. I will now turn the call back to management for any closing remarks.

我們的問答環節已經結束。現在，我將把電話轉回給管理階層，讓他們發表結束語。

Well, thank you operator. I'd like to thank our employees for their continued support and dedication to our business and both our long time shareholders and those that recently joined us for their support.

嗯，謝謝運營商。我要感謝我們的員工對我們業務的持續支持和奉獻，以及我們的長期股東和最近加入我們的股東的支持。

We look forward to speaking with you after the fourth quarter. Results. Have a good night. Everybody.

我們期待在第四季度之後與您交談。結果。祝你晚安。大家。

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

今天的會議到此結束，此時您可以掛斷電話。感謝您的參與。