Hudson Technologies Inc (HDSN) 2021 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Hudson Technologies Third Quarter 2021 Earnings Call. (Operator Instructions)

女士們先生們，下午好，歡迎來到 Hudson Technologies 2021 年第三季度財報電話會議。 （操作員說明）

It is now my pleasure to turn the floor over to your host, John Nesbett, IMS Investor Relations. Sir, please go ahead.

現在我很高興將發言權交給主持人 IMS 投資者關係部的 John Nesbett。先生，請繼續。

Thank you. Good afternoon, and welcome to our conference call to discuss Hudson Technologies financial results for the third quarter of 2021. On the call today are Brian Coleman, President and Chief Executive Officer; and Nat Krishnamurti, Chief Financial Officer.

謝謝。下午好，歡迎參加我們的電話會議，討論 Hudson Technologies 2021 年第三季度的財務業績。今天的電話會議是總裁兼首席執行官 Brian Coleman；和首席財務官 Nat Krishnamurti。

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 and 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 business 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 these elements can change and, in certain cases, are not within our control, we would ask you to consider and interpret them in that light. We urge you to review Hudson's most recent Form 10-K and other subsequent SEC filings with a discussion of the principal risks and uncertainties that affect our business and our performance and other factors that could cause 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、意見和預測的陳述都是前瞻性陳述。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。由於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，因此我們會請您從這個角度考慮和解釋它們。我們敦促您查看 Hudson 最近的 10-K 表格和其他隨後提交給美國證券交易委員會的文件，其中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實際結果出現重大差異的其他因素。

With that, I will now turn the call over to Brian Coleman. Go ahead, Brian.

有了這個，我現在將把電話轉給布賴恩科爾曼。來吧，布賴恩。

Good evening, and thank you for joining us. Our third quarter delivered a very strong close to our 9-month selling season as demonstrated by substantial revenue growth, significantly improved margins and improved profitability. Our improved performance was primarily due to the significant increases in average sales pricing across our portfolio of refrigerants, which far weighed the decrease we saw in volume in the third quarter. We attribute the decrease in demand largely to 3 factors: a greater attention to our customer value proposition and realigned sales strategy focused to prioritize long-term, higher-margin customers; a slower-than-anticipated reopening of certain commercial locations; and the impact from global supply chain shortages.

晚上好，感謝您加入我們。我們的第三季度在我們為期 9 個月的銷售旺季中表現強勁，收入大幅增長、利潤率和盈利能力顯著提高就證明了這一點。我們業績的改善主要是由於我們製冷劑產品組合的平均銷售價格大幅上漲，這大大抵消了我們在第三季度看到的銷量下降。我們將需求下降主要歸因於 3 個因素：更加關注我們的客戶價值主張並重新調整銷售策略，重點關注長期、利潤率更高的客戶；某些商業場所的重新開放速度低於預期；以及全球供應鏈短缺的影響。

As we conducted the final integration of ASPEN Refrigerants, we enhanced and unified our sales team towards implementing a strategy which renewed Hudson's focus on higher-margin, long-term customers. Our current leadership team has been examining the inherited ASPEN sales approach that, in certain instances, focused on higher volume sales at the sacrifice of gross margin.

在我們對 ASPEN Refrigerants 進行最終整合時，我們加強並統一了我們的銷售團隊，以實施一項戰略，使 Hudson 重新關注利潤率更高的長期客戶。我們目前的領導團隊一直在研究繼承的 ASPEN 銷售方法，在某些情況下，該方法以犧牲毛利率為代價專注於更高的銷量。

As we previously discussed, our industry is rapidly evolving. And for some time now, we've been carefully evaluating our sales strategies to maximize value as we begin navigating the new landscape created by federal legislation, such as the AIM Act, and the state-level initiatives. As we enter the initial stage of the AIM Act phasedown of virgin HFC production, it is critical that we ensure we have the inventory to best support our long-standing, higher-margin customers. Not only has our analysis been important for the 2021 season to establish a baseline of profitability but it's a necessary step to identify the customers who we anticipate will be with us for the long haul, both as refrigerant buyers as well as sources of used gas.

正如我們之前所討論的，我們的行業正在迅速發展。一段時間以來，我們一直在仔細評估我們的銷售策略，以在我們開始探索由聯邦立法（例如 AIM 法案）和州級舉措創造的新格局時實現價值最大化。隨著我們進入 AIM 法案逐步減少原始 HFC 生產的初始階段，確保我們擁有庫存以最好地支持我們的長期、利潤率更高的客戶至關重要。我們的分析不僅對 2021 年季節建立盈利基準很重要，而且這是確定我們預計將長期與我們合作的客戶的必要步驟，既包括製冷劑買家，也包括廢氣來源。

As it relates to commercial cooling, we believe that, over time, the demand headwinds caused by COVID will be eliminated as commercial space continues reopening and volumes will return to more normal cooling demand.

由於它與商業製冷有關，我們相信，隨著時間的推移，隨著商業空間繼續重新開放以及容量將恢復到更正常的製冷需求，由 COVID 造成的需求逆風將被消除。

Lastly, the global supply chain shortages have also impacted, on occasion, our ability to meet a portion of emergency response demand from customers this quarter. We are proactively managing our inventory to mitigate the challenging supply chain issues that we and many American businesses are facing to ensure that we can provide uninterrupted service to our customers.

最後，全球供應鏈短缺有時也會影響我們滿足本季度客戶部分應急響應需求的能力。我們正在積極管理我們的庫存，以緩解我們和許多美國企業面臨的具有挑戰性的供應鏈問題，以確保我們能夠為我們的客戶提供不間斷的服務。

From a pricing perspective, during the third quarter, we saw average selling prices of many refrigerants remain strong and increase from the Q2 levels. With the end of the selling season, we believe prices will remain stable through the fourth quarter and we believe we will see further price increases in the 2022 season as the implementation of the AIM Act phasedown begins. If we look to Europe as guidance for pricing relative to the initial steps taken under the HFC phasedown there, we could expect to see a further doubling or more in prices for HFC refrigerants in the foreseeable future. This pricing dynamic should be a stimulus for growth and reclamation.

從定價的角度來看，在第三季度，我們看到許多製冷劑的平均售價保持堅挺，並且比第二季度的水平有所上漲。隨著銷售季節的結束，我們認為價格將在第四季度保持穩定，並且我們相信隨著 AIM 法案逐步減少的實施，我們將在 2022 年看到價格進一步上漲。如果我們將歐洲視為相對於在那裡逐步減少 HFC 所採取的初始步驟的定價指南，我們可以預期在可預見的未來 HFC 製冷劑的價格會進一步翻一番或更多。這種定價動態應該會刺激增長和開墾。

I'd like to take a minute to discuss our gross margin performance. The significantly improved gross margin in the third quarter is primarily related to higher selling prices of certain refrigerants and the elimination of certain lower-margin sales. As you know, we take a FIFO approach to inventory accounting. And during the third quarter, we were largely selling inventory that have been acquired at lower cost. So our gross margin performance benefited from this dynamic.

我想花點時間討論一下我們的毛利率表現。第三季度毛利率的顯著改善主要與某些製冷劑的銷售價格上漲以及某些利潤率較低的銷售的消除有關。如您所知，我們採用 FIFO 方法進行存貨核算。在第三季度，我們主要出售以較低成本獲得的庫存。因此，我們的毛利率表現受益於這種動態。

Moving forward, through the close of the calendar 2021 and into 2022, we expect to see a return to more historical gross margin performance in the upper 20s to the low 30% levels as we expect to acquire HFC refrigerant inventory at higher price points for next year's sales season. We could begin to see gross margin improvement over historical levels with the growth in HFC reclamation volumes, which typically results in lower acquisition costs compared to virgin purchases. But that benefit to gross margin from increased reclaim supply will probably begin during the 2023 season.

展望未來，從 2021 年日曆年結束到 2022 年，我們預計毛利率將恢復到 20 多歲以上的歷史水平，達到 30% 的低水平，因為我們預計下一個價格點將以更高的價格收購 HFC 製冷劑庫存年的銷售旺季。隨著 HFC 回收量的增長，我們可能會開始看到毛利率比歷史水平有所提高，與原始採購相比，這通常會降低採購成本。但回收供應增加對毛利率的好處可能會在 2023 年季節開始。

As I mentioned a moment ago, legislative activity continues as our industry adopts new regulations to drive the transition to more environmentally friendly refrigerants. During the quarter, in September, the EPA published the final rule allocating allowances for the production and consumption of HFCs as mandated by the AIM Act and introduced a step-down of 10% in 2022 from baseline levels. As a reminder, the AIM Act, which was passed in December of 2020, requires the phasedown of HFC virgin production over the next 15 years, with a cumulative 40% reduction in the baseline scheduled to take place in just over 2 years. Reclamation will be critical to maintaining necessary HFC supply levels to ensure an orderly phasedown.

正如我剛才提到的，隨著我們的行業採用新法規來推動向更環保的製冷劑過渡，立法活動仍在繼續。在本季度，EPA 於 9 月發布了根據 AIM 法案的規定為 HFC 的生產和消費分配配額的最終規則，並在 2022 年將基準水平降低 10%。提醒一下，2020 年 12 月通過的 AIM 法案要求在未來 15 年內逐步減少 HFC 原始生產，併計劃在 2 年多一點的時間裡將基準線累計減少 40%。回收對於維持必要的 HFC 供應水平以確保有序逐步減少至關重要。

As a leading reclaimer, we believe this presents a significant long-term opportunity for Hudson to act as an HFC supplier while also transitioning away from the production of virgin HFCs. Remember that Hudson reclaims all refrigerant gases, including CFCs, HCFCs, HFCs and HFOs. As we expected, Hudson received an allocation allowance for the calendar year 2022 equal to approximately 3 million metric tons exchange value equivalents, or 1% of the total HFC consumption, with allowances for 2023 and beyond to be determined at a later date. We expect that the reduction in virgin HFC supply will help accelerate reclamation activity in the near term.

作為一家領先的回收商，我們認為這為哈德森提供了一個重要的長期機會，可以作為 HFC 供應商，同時也可以從生產原生 HFC 過渡。請記住，Hudson 回收所有製冷劑氣體，包括 CFC、HCFC、HFC 和 HFO。正如我們預期的那樣，Hudson 獲得了 2022 日曆年的配額，相當於約 300 萬公噸交換價值當量，或 HFC 總消費量的 1%，2023 年及以後的配額將在以後確定。我們預計原始 HFC 供應量的減少將有助於在短期內加速回收活動。

With the final HFC allowances in place, we believe we are competitively positioned through both our reclamation capabilities, our robust distribution network, to capture market share as both a supplier and a reclaimer serving the large and growing installed base of HFC equipment. We support the global efforts to transition our industry to more environmentally friendly gases. And we believe we have a unique opportunity to provide a sustainable alternative to virgin refrigerants as the HFC supply tightens.

隨著最終的 HFC 配額到位，我們相信我們通過我們的回收能力和強大的分銷網絡處於競爭地位，以作為供應商和回收商服務於龐大且不斷增長的 HFC 設備安裝基礎的市場份額。我們支持全球努力將我們的行業過渡到更環保的氣體。我們相信，隨著 HFC 供應緊張，我們有一個獨特的機會來提供原生製冷劑的可持續替代品。

We are also optimistic regarding opportunities associated with the state-level legislations, such as the Refrigerant Management Program established by California through CARB. Among other initiatives, the CARB program is proposing a requirement that OEMs use a minimum 10% reclaimed refrigerant in factory charged equipment. So with California leading the way, we are encouraged that we will become a leader in helping companies comply with potential state-imposed refrigerant regulations.

我們也對與州級立法相關的機會持樂觀態度，例如加利福尼亞州通過 CARB 制定的製冷劑管理計劃。在其他舉措中，CARB 計劃提議要求原始設備製造商在工廠充注設備中使用至少 10% 的回收製冷劑。因此，在加利福尼亞州的引領下，我們感到鼓舞的是，我們將成為幫助公司遵守潛在的州實施的製冷劑法規的領導者。

Hudson represents approximately 35% of refrigerant reclamation activity in the U.S., uniquely positioning us to support the phasedown of virgin production of HFC refrigerants and to serve as a key resource in the circular economy of refrigerants. We are energized by the opportunities we are seeing not only to grow our business but also to provide our services to benefit the environment.

哈德森代表了美國約 35% 的製冷劑回收活動，這使我們能夠以獨特的方式支持逐步減少 HFC 製冷劑的原始生產，並成為製冷劑循環經濟的關鍵資源。我們看到的機遇讓我們充滿活力，不僅可以發展我們的業務，還可以提供有益於環境的服務。

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

現在我會把電話轉給 Nat 來審查財務狀況。去吧，納特。

Thank you, Brian. For the third quarter ended September 30, 2021, Hudson recorded revenues of $60.6 million, an increase of 46% compared to $41.5 million in the comparable 2020 period. The growth is related to increased selling prices for certain refrigerants during the quarter, as Brian mentioned. Gross margin was 39% for the third quarter of 2021 compared to 22% in the third quarter of 2020. The improved gross margin is primarily attributable to higher selling prices in the quarter which, in the context of our FIFO approach to inventory, favorably impacted our margin performance. As we move through the close of the calendar year and the fourth quarter, which is historically our weakest quarter, we expect gross margin performance to be more consistent with historical gross margin levels.

謝謝你，布萊恩。截至 2021 年 9 月 30 日的第三季度，Hudson 的收入為 6060 萬美元，與 2020 年同期的 4150 萬美元相比增長了 46%。正如 Brian 提到的那樣，增長與本季度某些製冷劑的銷售價格上漲有關。 2021 年第三季度的毛利率為 39%，而 2020 年第三季度為 22%。毛利率的提高主要是由於本季度銷售價格上漲，在我們採用 FIFO 庫存方法的背景下，這對我們產生了有利影響我們的保證金表現。隨著日曆年和第四季度的結束，這是我們歷史上最疲軟的季度，我們預計毛利率表現將與歷史毛利率水平更加一致。

SG&A for the third quarter of 2021 was $6.1 million or 10% of revenue as compared to $6.2 million or 14.9% of revenue in the third quarter of 2020. We recorded operating income of $16.9 million in the third quarter of 2021 compared to operating income of $2.1 million in the third quarter of 2020. Interest expense for the third quarter of 2021 was $2.8 million compared to $3 million reported during the third quarter of 2020, mainly due to principal payments made on the term loan. The company recorded in other income a gain on forgiveness of its paycheck protection program, i.e., PPP loan, of $2.5 million in the third quarter of 2021.

2021 年第三季度的 SG&A 為 610 萬美元，佔收入的 10%，而 2020 年第三季度為 620 萬美元，佔收入的 14.9%。我們在 2021 年第三季度的營業收入為 1690 萬美元，而營業收入為2020 年第三季度為 210 萬美元。2021 年第三季度的利息支出為 280 萬美元，而 2020 年第三季度報告的利息支出為 300 萬美元，這主要是由於定期貸款的本金支付。該公司在 2021 年第三季度的其他收入中記錄了免除其薪水保護計劃（即 PPP 貸款）的收益 250 萬美元。

The company recorded net income of $15.9 million or $0.36 per basic and $0.34 per diluted share in the third quarter of 2021 compared to net income of $39,000 or $0.00 per basic and diluted share in the same period of 2020. On September 30, 2021, we had approximately $53 million of total availability, consisting of our cash balance and revolver availability. Increased revolver availability provides the company with better opportunities to procure inventory for the upcoming selling season. We have strong liquidity, and our term loan and revolving loan credit facilities provide us with a solid financial platform and flexibility as we look forward.

公司在 2021 年第三季度的淨收入為 1590 萬美元或每股基本股 0.36 美元和稀釋後每股 0.34 美元，而 2020 年同期的淨收入為 39,000 美元或每股基本股和稀釋後每股 0.00 美元。2021 年 9 月 30 日，我們總可用性約為 5300 萬美元，包括我們的現金餘額和可用左輪手槍。左輪手槍可用性的增加為公司提供了更好的機會來為即將到來的銷售季節採購庫存。我們擁有強大的流動性，我們的定期貸款和循環貸款信貸額度為我們提供了堅實的財務平台和我們期待的靈活性。

Our leverage ratio on September 30, 2021, was 2.35 as compared to 5.84 and 11.22 as of December 31, 2020 and 2019, respectively. This improvement is a result of both increased earnings and delevering the balance sheet. As discussed on the last call, we have initiated the process to refinance our debt.

我們在 2021 年 9 月 30 日的槓桿率為 2.35，而截至 2020 年 12 月 31 日和 2019 年 12 月 31 日分別為 5.84 和 11.22。這種改善是收益增加和資產負債表去槓桿化的結果。正如上次電話會議所討論的那樣，我們已經啟動了為我們的債務再融資的程序。

I will now turn the call back over to Brian.

我現在將把電話轉回給布賴恩。

Thanks, Nat. As we close out the 2021 selling season, we are excited about the opportunities ahead for 2022 and beyond. We continue to focus on growing our leadership position in the refrigerant and reclamation industry.

謝謝，奈特。隨著 2021 年銷售季的結束，我們對 2022 年及以後的機遇感到興奮。我們繼續專注於提升我們在製冷劑和回收行業的領導地位。

Operator, we will now open the call to questions.

接線員，我們現在開始提問。

(Operator Instructions) And the first question is coming from Ryan Sigdahl from Craig-Hallum Capital Group.

（操作員說明）第一個問題來自 Craig-Hallum Capital Group 的 Ryan Sigdahl。

Curious if you can elaborate on the debt refi process. I know you announced you started it before. You didn't give much of an update now. Curious how that's trending and any more details you can share there.

想知道您能否詳細說明債務再融資流程。我知道你之前宣布你開始了它。你現在沒有提供太多更新。好奇它的趨勢如何以及您可以在那里分享的更多詳細信息。

Yes. Sure. Thank you. We are on schedule, as we mentioned, to finish the debt refi process by the end of this year.

是的。當然。謝謝。正如我們所提到的，我們正按計劃在今年年底前完成債務再融資程序。

And is that finished as in everything is completed or just announce what's going to happen?

是像一切都已完成一樣完成，還是只是宣布將要發生的事情？

Yes. We wouldn't announce anything until it was completed.

是的。在它完成之前我們不會宣布任何事情。

Yes.

是的。

So our goal, as we've stated before, is to try to get everything done by year-end.

因此，正如我們之前所說，我們的目標是努力在年底前完成所有工作。

Correct.

正確的。

Makes sense. On the quarter, were volumes up or down year-over-year?

說得通。在本季度，銷量是同比增長還是下降？

Well, volumes are down, as I think in my prepared remarks, for primary 3 reasons. One is reexamining our sales strategy, noting that prior to the integration, there were certain sales made through the ASPEN side of the business that would be higher volume but much lower margin. The elimination of that activity probably represented about 2/3 of the total decline in volume in the third quarter. We were slightly impacted by both the commercial side of cooling. It seems to continue to be down and seems to be probably mostly related to COVID closures or openings that are not really openings. Like, for example, our office building still probably has less than 50% attendance on any given day.

好吧，正如我在準備好的發言中所認為的那樣，銷量下降主要有 3 個原因。一是重新審視我們的銷售策略，注意到在整合之前，通過業務的 ASPEN 方面進行的某些銷售量會更高，但利潤率要低得多。該活動的取消可能佔第三季度總銷量下降的 2/3 左右。我們受到冷卻的商業方面的輕微影響。它似乎繼續下降，似乎主要與 COVID 關閉或併非真正開放的開放有關。例如，我們的辦公樓在任何一天的出勤率仍然可能低於 50%。

And then lastly, there were some missed opportunities during the period relative to primarily emergency calls for refrigerant, whether it be supply chains or raw materials or disruptions because of hurricanes. But really, in Continental United States, freight logistics has been very, very challenging. We've had months this year, in some cases, in the third quarter, where on-time delivery rates are below 80%. So there's been a little bit of frustration. We've certainly improved and we're well over 90% now. And in recent weeks, we've had actually 100% on-time delivery, which is really a testament to our folks in customer service and shipping. But it's been a very difficult year.

最後，在此期間，與製冷劑的主要緊急呼叫有關，無論是供應鏈、原材料還是颶風造成的中斷，都錯失了一些機會。但實際上，在美國大陸，貨運物流一直非常非常具有挑戰性。我們今年有幾個月，在某些情況下，在第三季度，準時交貨率低於 80%。所以有一點沮喪。我們確實有所改進，現在已經超過 90%。最近幾週，我們實際上 100% 準時交貨，這確實證明了我們在客戶服務和運輸方面的工作人員。但這是非常艱難的一年。

Brian, number one, on the sales strategy change or, I guess, examining that, how much more work do you think is to be done there? Do you think you've cut out what you needed to and this is the right base to kind of build off of and then assume seasonality on that?

布賴恩，第一，關於銷售策略的改變，或者，我想，檢查一下，你認為還有多少工作要做？你認為你已經削減了你需要的東西嗎？這是建立基礎然後假設季節性的正確基礎嗎？

Yes. Our new leadership team that have coalesced now under one Hudson, meaning the final integration of both the Hudson sales business and the ASPEN sales business that we intentionally kept separate in the initial years of the acquisition, and then I think we announced late last year that we were looking at merging it all into one, really gives us an opportunity to examine the entire business as one and do so in a critical way but also to think about long-term growth initiatives and value propositions and sort of really taking the ASPEN business and evolving it into or merging it into or making it the same as the Hudson value proposition, caused this examination and the decision to walk away from some business that, again, was very low margin, had very little benefit to the operating line.

是的。我們新的領導團隊現在已經合併到一個 Hudson 之下，這意味著最終整合 Hudson 銷售業務和我們在收購的最初幾年有意分開的 ASPEN 銷售業務，然後我想我們去年年底宣布我們正在考慮將其全部合併為一個，這確實給了我們一個機會來審視整個業務，並以一種批判的方式這樣做，同時也考慮了長期增長計劃和價值主張，並在某種程度上真正接管了 ASPEN 業務並將其發展或合併到 Hudson 的價值主張中，或使其與 Hudson 的價值主張相同，導致了這次審查，並決定放棄一些利潤率非常低、對運營線幾乎沒有好處的業務。

So we feel like we made the right decision. We feel that allows our sales force more time to spend on areas that could provide more profitability. So we think, again, it was an important step. It should be completed this year. But it's a step that's a platform for 2022 and beyond.

所以我們覺得我們做出了正確的決定。我們覺得這讓我們的銷售人員有更多時間花在可以提供更多利潤的領域。所以我們再次認為，這是重要的一步。應該在今年完成。但這是 2022 年及以後的平台。

One more follow-up on that and then I'll move on. But does that drop or, I guess, reduction in low-margin sales for business, does that impair your reclamation volume at all, thinking they buy some, they bring back dirty gas where it helps the feedstock?

對此再進行一次跟進，然後我將繼續。但這是否會下降，或者我猜，企業的低利潤銷售會減少，這是否會完全損害您的回收量，認為他們購買了一些，他們將骯髒的氣體帶回了有助於原料的地方？

If that was the case, we probably wouldn't have made that decision because we would have looked at these customers in a more holistic way. I think we would have to go back in time, but I think we mentioned that one of the opportunities we are hoping to achieve out of the acquisition of ASPEN was the ability to acquire more used gas. And that I think is true then and is still true today. However, when you look at some of these high-volume, low-margin sales, they typically are with entities that were not ever going to return used gas. So for us, it just was a business that didn't make sense when you think about the energy we spend on that holistic relationship on the buy and sell with most of our customers.

如果真是這樣，我們可能不會做出那個決定，因為我們會以更全面的方式看待這些客戶。我想我們必須回到過去，但我想我們提到過我們希望通過收購 ASPEN 實現的機會之一是能夠獲得更多用過的天然氣。我認為這在當時是正確的，今天仍然如此。然而，當您查看其中一些高產量、低利潤的銷售時，它們通常與永遠不會返還用過的天然氣的實體有關。所以對我們來說，當你想到我們在與大多數客戶的買賣關係上花費的精力時，這只是一項沒有意義的業務。

Makes sense. I guess curious on the gross margin commentary given pricing remains strong, exiting the seasonally strong period into Q4. Q4 is low volume. So I guess I would have assumed some of that transitory price benefit would help gross margin in Q4 and even into early next year. So can you walk through and talk through, I guess, the pricing of where your inventory is and that gross margin into Q4?

說得通。我猜想對毛利率評論感到好奇，因為定價仍然強勁，退出季節性強勁時期進入第四季度。 Q4 是低音量。所以我想我會假設一些暫時的價格優勢將有助於第四季度甚至明年年初的毛利率。那麼，我想，你能否通過並討論你的庫存價格和第四季度的毛利率？

Well, look, our cost and inventory, let's say, lag the sale price by a couple of quarters. And so we've had 2 strong quarters that, if you will, we benefited on increased sale price under our FIFO methodology that slowly will catch up to the increases in sales price at some point and bring us back to somewhat more normal gross margin percentages. Now the dollars per unit will be higher. Therefore, the gross profit dollars will be higher. But the percentage is probably going to go backwards towards that upper 20s, probably more likely to lower 30%, but not necessarily the upper 30s that we've achieved, particularly in Q3.

好吧，你看，我們的成本和庫存比銷售價格滯後幾個季度。因此，我們有兩個強勁的季度，如果您願意的話，我們受益於根據我們的 FIFO 方法提高的銷售價格，這將在某個時候慢慢趕上銷售價格的上漲，並使我們回到更正常的毛利率百分比.現在每單位美元會更高。因此，美元的毛利會更高。但是這個百分比可能會倒退到 20 多歲，可能會降低 30%，但不一定是我們已經達到的 30 多歲，特別是在第三季度。

Last question for me. You mentioned the HFC allocation, nice to see you guys get that this time around. How do you feel about the 1%? And I guess is that really equivalent to 1% effectively of the HFC allocations?

我的最後一個問題。你提到了 HFC 分配，很高興看到你們這次得到它。你怎麼看待這1%？我想這真的相當於 HFC 配額的 1% 嗎？

So it's a tough question to ask but a good question. Because you're dealing with these metric tons of CO2 equivalent, you don't really know how you necessarily stack up to the other folks in the group because you could have someone in the group that was importing high GWP refrigerant, as a result, they need more CO2 equivalent allocations, which could result in fewer pounds than someone else. So we don't -- it's opaque, if you will, as to what exactly this means on a per pound basis. But it could be some people that have a higher allowance could end up with fewer pounds just because they're dealing with higher GWP gases.

所以這是一個很難問的問題，但卻是一個很好的問題。因為你正在處理這些公噸的二氧化碳當量，你真的不知道你如何與小組中的其他人相提並論，因為小組中可能有人進口了高 GWP 製冷劑，結果，他們需要更多的二氧化碳當量配額，這可能會比其他人減重。所以我們不——如果你願意的話，它是不透明的，關於這在每磅基礎上到底意味著什麼。但可能有些人擁有更高的津貼，但最終體重會減少，因為他們正在處理更高的 GWP 氣體。

But at the end of the day, we're very pleased. As you said a moment ago, we were shut out under the ozone-depleting substance phaseouts. We have a long way to go yet in the AIM Act. There's a whole refrigerant management section where the EPA ought to find ways to help grow and promote reclamation. We think it's necessary, obviously, with a very aggressive phasedown. So we're really looking forward to the next set of rule-making that likely will be issued sometime next year.

但歸根結底，我們非常高興。正如您剛才所說，我們因逐步淘汰消耗臭氧層物質而被拒之門外。我們在 AIM 法案方面還有很長的路要走。有一個完整的製冷劑管理部分，EPA 應該找到幫助發展和促進回收的方法。顯然，我們認為有必要進行非常積極的逐步削減。所以我們真的很期待明年某個時候可能會發布的下一套規則制定。

(Operator Instructions) Okay. We have no remaining questions in queue. I'd like to turn the floor back to management for any closing remarks.

（操作員說明）好的。隊列中沒有剩餘問題。我想將發言權轉回管理層聽取任何結束語。

Thank you, operator. I'd like to thank our employees for their continued support and dedication to our business through both the COVID challenges and particularly as we complete our final integration. I want to again thank our long-time shareholders and those that recently joined us for their support.

謝謝你，運營商。我要感謝我們的員工通過 COVID 挑戰，特別是在我們完成最終整合時，對我們業務的持續支持和奉獻。我想再次感謝我們的長期股東和最近加入我們的股東的支持。

Thank you to everyone for participating in today's conference call, and we look forward to speaking with you after the fourth quarter results. Have a good night, everybody.

感謝大家參加今天的電話會議，我們期待在第四季度業績後與您交談。大家晚上好

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

謝謝你們，女士們，先生們。這確實結束了今天的電話會議。此時您可以斷開電話線，度過美好的一天。感謝您的參與。