Hudson Technologies Inc (HDSN) 2020 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Hudson Technologies First Quarter 2020 Earnings Conference Call. (Operator Instructions) At this time, it is my pleasure to turn the floor over to your host for today, Nat Krishnamurti. Please go ahead. The floor is yours.

女士們先生們，美好的一天，歡迎來到哈德遜科技 2020 年第一季度收益電話會議。（操作員說明）此時，我很高興將發言權交給今天的主持人 Nat Krishnamurti。請繼續。地板是你的。

Thank you. Good evening, and sorry for the delay. Welcome to our conference call to discuss Hudson Technologies' financial results for the first quarter of 2020. My name is Nat Krishnamurti, CFO of Hudson Technologies. On the call with me today, we have Kevin Zugibe, Chairman and CEO; and Brian Coleman, President and Chief Operating Officer. 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.

謝謝。晚上好，很抱歉耽擱了。歡迎參加我們的電話會議，討論 Hudson Technologies 2020 年第一季度的財務業績。我叫 Nat Krishnamurti，是 Hudson Technologies 的首席財務官。今天與我通話的有董事長兼首席執行官 Kevin Zugibe；總裁兼首席運營官 Brian Coleman。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。雖然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，但正如我們今天所看到的那樣，它們並不能保證未來的表現。

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.

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，並且在某些情況下不在我們的控制範圍內，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 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，以討論影響我們的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因素。

With that, we will now turn the call over to Brian Coleman.

有了這個，我們現在將把電話轉給布賴恩科爾曼。

Good evening, and thank you for joining us. Again, we apologize for the delay. Let me start by saying that COVID-19 has had a dramatic impact on the lives of every person, business and industry throughout the United States. And of course, Hudson is no exception. However, Hudson operates in a critical infrastructure industry and is an essential business as defined by the United States government as we procure, process, service and deliver refrigerants and industrial gases to the government and refrigerants and services to wholesale and retail organizations, which serve hospitals, supermarkets and many other industries throughout the United States. We have kept our plants operating and have been effectively running our operations while following all state and federal guidelines to keep our employees safe and healthy.

晚上好，感謝您加入我們。再次，我們對延誤表示歉意。首先讓我說，COVID-19 對美國每個人、每個企業和每個行業的生活都產生了巨大影響。當然，哈德森也不例外。然而，Hudson 在關鍵基礎設施行業開展業務，並且是美國政府定義的必要業務，因為我們採購、加工、服務和交付製冷劑和工業氣體給政府，以及製冷劑和服務給為醫院服務的批發和零售組織、超市等眾多行業遍及全美。在遵守所有州和聯邦準則以確保我們員工的安全和健康的同時，我們一直保持我們的工廠運營並有效地運營我們的業務。

As of this date, there has been no material impact on our ability to procure or distribute our products and services. Our priorities throughout the pandemic have been to ensure the health and safety of our employees, to keep our products in supply and to maintain the quality and safety of our products to best serve our customers across all channels as they adapt to the crisis and to position ourselves to emerge strong when the crisis ends.

截至目前，我們採購或分銷產品和服務的能力沒有受到重大影響。在整個大流行期間，我們的首要任務是確保我們員工的健康和安全，保持我們的產品供應，並保持我們產品的質量和安全，以便在我們的客戶適應危機和定位時，通過所有渠道為他們提供最好的服務我們自己在危機結束時變得強大。

Looking back at the first quarter of 2020, we see that the market has stabilized. Refrigerant prices have been constant, and we're seeing some strengthening in the pricing of R-22. In addition, we saw an increase in the volume over the same period last year, building on the increased volume we saw in 2019. During the first quarter, we improved the gross margins over 2019 and believe we have an opportunity to further drive improved margins in 2020 as we replace higher-priced inventory with low-priced product. We believe that customers' inventories are low, and with the elimination of R-22 production importation in 2020, we expect to see a tightening in the supply of virgin R-22.

回顧2020年第一季度，我們看到市場已經企穩。製冷劑價格一直保持不變，我們看到 R-22 的價格有所上漲。此外，在 2019 年銷量增加的基礎上，我們看到銷量比去年同期有所增加。在第一季度，我們提高了 2019 年的毛利率，並且相信我們有機會在 2020 年進一步提高利潤率，因為我們用低價產品取代了高價庫存。我們認為客戶的庫存較低，隨著 2020 年 R-22 生產進口的取消，我們預計原生 R-22 的供應將趨緊。

We are a few weeks away from the prime selling season. So it's too early in the season to know how pricing will develop. As we proceed through 2020, we are concerned that economic factors resulting from the various governmental restrictions that have been put in place as a result of COVID-19 outbreak could have a negative impact on the demand and/or price for refrigerants. The effect on refrigerant sales due to the closing of businesses, combined with negative financial impact to the economy is unknown at this point. Time will tell. This is yet another reason why we described the sales season as a 9-month season, not necessarily a quarter-to-quarter season.

我們距離黃金銷售季節還有幾週的時間。因此，現在就知道價格將如何發展還為時過早。隨著 2020 年的到來，我們擔心因 COVID-19 爆發而實施的各種政府限制導致的經濟因素可能會對製冷劑的需求和/或價格產生負面影響。企業關閉對製冷劑銷售的影響，以及對經濟的負面財務影響目前尚不清楚。時間會證明一切。這也是我們將銷售季描述為 9 個月而不一定是季度季的另一個原因。

The marketplace will likely adopt a phaseout of HFC refrigerants as the development and use of more environmentally friendly products continues. The American Innovation and Manufacturing Act of 2019 or the AIM Act, if enacted, would phase down HFC production over the next 15 years. The AIM Act enjoys strong bipartisan support, and both the House and the Senate are expected to take up further consideration of the AIM Act when they return from their extended COVID break. We are encouraged by the level of bipartisan support for which -- for a bill which, if enacted, would start a regulated phasedown of HFCs. We believe a phasedown of HFCs will lead to the establishment of an allocation system and tightening in the supply-demand balance that will likely result in increased pricing for these refrigerants. Our diverse portfolio of refrigerants includes HFCs, R-22 and CFC sales, and we are preparing for future demand for HFO refrigerants, which are designed ultimately to replace HFCs.

隨著更環保產品的開發和使用的繼續，市場可能會逐步淘汰 HFC 製冷劑。2019 年美國創新和製造法案或 AIM 法案如果獲得通過，將在未來 15 年內逐步減少 HFC 的生產。AIM 法案得到了兩黨的大力支持，眾議院和參議院預計在延長的 COVID 休假結束後將進一步考慮 AIM 法案。我們對兩黨支持的程度感到鼓舞 - 對於一項法案，如果頒布，將開始逐步減少氫氟碳化合物。我們認為，逐步減少 HFC 將導致分配系統的建立和供需平衡的收緊，這可能會導致這些製冷劑的價格上漲。我們多樣化的製冷劑產品組合包括 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，這些製冷劑最終旨在取代 HFC。

HFC sales represent a growing percentage of our revenues, and with the projected installed base, we see HFCs as a tremendous long-term growth opportunity for our company. We continue to replace our higher cost FIFO inventory layers with lower-priced products, which we believe will drive continued improvement in our margins in 2020. we have increased overall sales volume to our customers and have positioned the company to benefit from stabilization of industry pricing dynamics. We remain optimistic about the long-term opportunity in front of us, and we believe we have a competitive advantage in the marketplace because of our long-standing experience and because of 3 key strategic advantages: first, our strong distribution network, which puts us at 2 key points in the supply chain, our ability to sell all refrigerants from legacy gases like the CFCs to today's commonly used HCFCs and HFCs and to tomorrow's next-generation HFOs and our state-of-the-art proprietary technology that enables us to reclaim all of these refrigerants and thereby become the producer supplier of phased-out refrigerants.

HFC 銷售額占我們收入的比例越來越大，根據預計的裝機量，我們認為 HFC 對我們公司來說是一個巨大的長期增長機會。我們繼續用價格較低的產品取代成本較高的 FIFO 庫存層，我們相信這將推動我們在 2020 年的利潤率持續提高。我們增加了對客戶的整體銷量，並使公司能夠從行業定價動態的穩定中受益。我們對擺在我們面前的長期機會保持樂觀，我們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 個關鍵的戰略優勢：首先，我們強大的分銷網絡，這使我們在供應鏈的兩個關鍵點，我們能夠銷售所有製冷劑，從 CFC 等遺留氣體到今天常用的 HCFC 和 HFC，再到明天的下一代 HFO，以及我們最先進的專有技術，使我們能夠回收所有這些製冷劑，從而成為淘汰製冷劑的生產供應商。

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 first quarter ended March 31, 2020, Hudson recorded revenues of $36.4 million, an increase of 5% compared to $34.7 million in the comparable 2019 period, primarily due to an increase in the volume of refrigerants sold. Gross margin for the first quarter of 2020 was 23% compared to gross margin of 20% in the first quarter of 2019, which, as Brian mentioned, is primarily due to selling lower price inventory, which continues to replace higher layer FIFO inventory from last year. We reported operating income of $400,000 in the first quarter of 2020 compared to $200,000 in the first quarter of 2019.

謝謝你，布萊恩。截至 2020 年 3 月 31 日的第一季度，Hudson 的收入為 3640 萬美元，與 2019 年同期的 3470 萬美元相比增長了 5%，這主要是由於製冷劑銷量的增加。2020 年第一季度的毛利率為 23%，而 2019 年第一季度的毛利率為 20%，正如 Brian 所提到的，這主要是由於出售低價庫存，繼續取代上一季度的更高層級 FIFO 庫存年。我們報告 2020 年第一季度的營業收入為 400,000 美元，而 2019 年第一季度為 200,000 美元。

During the first quarter of 2020, the company recorded a net loss of $2.9 million, or a loss of $0.07 per basic and diluted share as compared to a net loss of $4 million or a loss of $0.09 per basic and diluted share in the same period of 2019.

2020 年第一季度，公司錄得淨虧損 290 萬美元，即每股基本股和稀釋後每股虧損 0.07 美元，而同期淨虧損為 400 萬美元，即每股基本股和稀釋後每股虧損 0.09 美元2019 年。

Selling, general and administrative expenses for the first quarter of 2020 were at $7.3 million compared to $6.0 million in the first quarter of 2019, mainly due to increased nonrecurring professional fees.

2020 年第一季度的銷售、一般和管理費用為 730 萬美元，而 2019 年第一季度為 600 萬美元，這主要是由於非經常性專業費用增加。

The current SG&A run rate is about $7 million per quarter. Interest expense for the first quarter 2020 was $3.3 million, a decrease of $0.9 million from the $4.2 million reported during the first quarter of 2019, mainly due to the company paying down $14 million of principal term loan debt in December 2019.

目前的 SG&A 運行率約為每季度 700 萬美元。2020 年第一季度的利息支出為 330 萬美元，比 2019 年第一季度報告的 420 萬美元減少了 90 萬美元，這主要是由於公司在 2019 年 12 月償還了 1400 萬美元的本金定期貸款債務。

At March 31, 2020, we had approximately $27 million of total availability, which includes our cash balance and revolver availability. Our total debt balance at March 31, 2020, was approximately $109.6 million.

截至 2020 年 3 月 31 日，我們的總可用資金約為 2700 萬美元，其中包括我們的現金餘額和可用的左輪手槍。截至 2020 年 3 月 31 日，我們的總債務餘額約為 1.096 億美元。

On an LTM March 31, 2020 basis, the term loan leverage ratio was 11.28x. 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 into the coming years. I will now turn the call back over to Brian.

在 2020 年 3 月 31 日的 LTM 基礎上，定期貸款槓桿率為 11.28 倍。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展望未來幾年提供了堅實的財務平台和靈活性。我現在將把電話轉回給布賴恩。

Thanks, Nat. Hudson remains a leader in the refrigerant and reclamation business with the expertise, innovative technology and a well-established distribution network necessary to drive growth. Despite the challenges encountered in the current economic conditions, there continues to be a growing demand for refrigerants and cooling systems.

謝謝，奈特。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，仍然是製冷劑和回收業務的領導者。儘管在當前的經濟條件下遇到了挑戰，但對製冷劑和冷卻系統的需求仍在不斷增長。

That, combined with our ability to provide any refrigerant, any place, at any time and our well-established customer base gives us a solid foundation for future growth of our company. Operator, we'll now open the call to questions.

再加上我們隨時隨地提供任何製冷劑的能力，以及我們穩固的客戶群，為我們公司未來的發展奠定了堅實的基礎。接線員，我們現在開始提問。

(Operator Instructions) We'll go first to Gerry Sweeney at Roth Capital.

（操作員說明）我們將首先聯繫 Roth Capital 的 Gerry Sweeney。

I hope you're hanging in there with this COVID issue personally.

我希望你能親自解決這個 COVID 問題。

Yes, we are, Gerry. And just sorry for the delay, we had a problem with the phone number. So sorry about that.

是的，我們是，格里。很抱歉耽擱了，我們的電話號碼有問題。很抱歉。

No, no worries. I called the international number, that's when I got through. So curious, just a couple of quick questions. You commented on customer inventory being low. Just wanted to dig into that. Was that just your internal sales, making calls, talking to customers and just wanted to see what was the basis of the comment?

不，不用擔心。我撥通了國際號碼，然後就接通了。很好奇，只是幾個簡單的問題。您評論說客戶庫存很低。只是想深入研究一下。那隻是你的內部銷售、打電話、與客戶交談，只是想看看評論的基礎是什麼？

Yes. I think in the prepared remarks, we were talking to R-22, but based on speaking with customers, we do believe, in general, and again, it's really from the sales calls that all inventories are somewhat low.

是的。我認為在準備好的評論中，我們正在與 R-22 交談，但基於與客戶的交談，我們確實相信，一般來說，從銷售電話來看，所有庫存都有些低。

All inventories, not just R-22?

所有庫存，而不僅僅是 R-22？

Yes. It seems that right now, for the season, people and maybe it's the economy. Again, we're still trying to figure out how much could be impacted by the economy versus the weather, obviously, April is always a cool month. So -- but we think the inventories are low right now.

是的。現在看來，對於這個季節來說，人，也許是經濟。同樣，我們仍在試圖弄清楚經濟與天氣的影響有多大，顯然，四月總是涼爽的月份。所以 - 但我們認為現在庫存很低。

And then, I mean, historically, well, the buying patterns have changed a little bit over time, more towards what we'll call just-in-time inventory, and I suspect with some of the COVID and economic issues we're having -- I would suspect that this sort of just-in-time buying pattern is what you're still seeing today? Or did you have any sort of pre-buy with ...

然後，我的意思是，從歷史上看，隨著時間的推移，購買模式發生了一些變化，更多的是我們稱之為即時庫存，我懷疑我們遇到的一些 COVID 和經濟問題-- 我懷疑這種即時購買模式是您今天仍然看到的嗎？或者您是否有任何預購...

No. When you look at the results of Q1 '20 compared to '19, your volume is up but again, it's still that change behavior or pattern that we started to see in 2018 where people aren't prebuying anymore. And as I think you just said a few moments ago, we would agree, it's probable for some period of time that people will buy just as needed because of the uncertainty regarding the economy.

不。當您查看與 19 年相比的 20 年第一季度的結果時，您的數量有所增加，但同樣，我們在 2018 年開始看到人們不再預購的行為或模式發生了變化。正如我想你剛才所說的那樣，我們同意，由於經濟的不確定性，人們可能會在一段時間內根據需要購買。

Okay. And from time to time, we have discussed some, I think, R-22 prices. Could you give us any indication as to where the market is today?

好的。我認為，我們不時討論過一些 R-22 的價格。你能告訴我們今天的市場情況嗎？

So the last time we spoke, we would have talked about, let's say, $10 prices.

所以我們上次談話時，我們會討論，比方說，10 美元的價格。

And when we said that, let's just say low $10, we're seeing higher $10 prices right now, not real significant increases, but definitely increases.

當我們這麼說時，我們只說低 10 美元，我們現在看到 10 美元的價格上漲，不是真正的顯著上漲，但肯定會上漲。

And also, I think on the $10 number, it was pretty -- I mean, there wasn't a whole lot of volume. So there was always questions of was that the true price? I suspect volumes are higher and it's more of a consistent, higher $10 that you're seeing? In other words, feel pretty confident in that price?

而且，我認為在 10 美元的數字上，它很漂亮——我的意思是，沒有太多的成交量。所以總是有人質疑這是真實的價格嗎？我懷疑交易量更高，而且你看到的更一致，更高的 10 美元？換句話說，對這個價格很有信心？

Yes. We feel confident in the price as of now. Again, it's still early in the season and some uncertainty about the economy. But right now, the price seems to be stable.

是的。截至目前，我們對價格充滿信心。同樣，現在仍處於季節初期，經濟存在一些不確定性。但是現在，價格似乎很穩定。

Okay. And then the final question is just even with COVID, pre-COVID, what was the market or opportunity? Or how was your -- the ability to collect R-22? Was there enough gas coming back? And were you seeing a good amount of volume just to keep inventories at an appropriate level?

好的。然後最後一個問題是即使有 COVID，在 COVID 之前，市場或機會是什麼？或者你的 - 收集 R-22 的能力如何？有足夠的氣體返回嗎？您是否看到大量的交易量只是為了將庫存保持在適當的水平？

Well, we still had the stockpile of 22 that came with the ASPEN acquisition. And we said that we thought that we would sell out this year, and that's what we think is going to happen. So reclaim though is a concern for the future in that the reclaim numbers are still low relative to what we think the demand is that possibly will mean there's going to be shortages and then higher prices even which in some respects may be a good thing. But we are concerned, and we are trying new things to grow reclaim volumes.

好吧，我們還有收購 ASPEN 後的 22 庫存。我們說我們認為我們今年會賣光，這就是我們認為會發生的事情。因此，回收雖然是未來的一個問題，因為回收數量相對於我們認為的需求仍然較低，這可能意味著將會出現短缺，然後價格上漲，即使在某些方面這可能是一件好事。但我們很擔心，我們正在嘗試新事物來增加回收量。

(Operator Instructions) We'll go next to Ryan Sigdahl at Craig-Hallum Capital.

（操作員說明）我們將在 Craig-Hallum Capital 的 Ryan Sigdahl 旁邊。

This is Matt on for Ryan. Just following up quickly on the answer to the last question. What are you trying to do to spur reclaim volume? Or anything you can say there?

這是 Ryan 的 Matt。只是快速跟進最後一個問題的答案。你想做什麼來刺激回收量？或者你有什麼可以在那裡說的嗎？

Yes. Not to get into too much detail, but we are initiating newer programs to newer customers. And so we have some optimism about that, and we put a fair amount of sales and marketing support behind that.

是的。不想談太多細節，但我們正在為新客戶啟動新計劃。因此，我們對此持樂觀態度，我們為此提供了大量的銷售和營銷支持。

Great. On the inventory from the Airgas acquisition, I think last quarter, you had talked about, hopefully, kind of getting through that by the end of Q2. Is that still kind of the estimated time line? And then do you think that margins can kind of improve from 23% in Q1 -- improve from there kind of in the back half of the year?

偉大的。關於收購 Airgas 的庫存，我想上個季度，你曾談到，希望在第二季度末能夠解決這個問題。這仍然是估計的時間線嗎？然後你認為利潤率可以從第一季度的 23% 提高——從今年下半年的那種提高嗎？

Yes. So we believe that we'll sell-through the higher-priced inventory by the end of Q2. And yes, we do believe there'll be improved margins in the back half of the year as a result of that.

是的。因此，我們相信我們將在第二季度末出售高價庫存。是的，我們確實相信今年下半年的利潤率會因此而提高。

Great. And then just last 1 for me, and I'll jump back in the queue. Obviously, with COVID-19, you had alluded to, obviously, the potential impact on demand. Is there anything you're seeing even just today or in the last several weeks that would indicate that customers could be pulling back on purchases or anything boots on the ground level on that?

偉大的。然後對我來說是最後 1 個，我會跳回到隊列中。顯然，對於 COVID-19，您顯然已經提到了對需求的潛在影響。即使就在今天或過去幾週，您是否看到任何跡象表明客戶可能會減少購買或地面上的任何靴子？

I'd say no at this point. It's early in the season. It's still cool. We're not in the heart of the season yet. Again, that's still a big unknown for us, and it could have a big impact, a small impact. We really can't tell. Anywhere products or people who are being kept cold, there's probably a refrigeration and air conditioning. So there's a need for refrigerants. When you see buildings being shut down right now, and people working from home, that's an effect. It will be effect on comfort cooling on office buildings. It could even be the residential have an effect where more people are working from home, it could go the other way, where, hey, I'm getting my system fixed at home because I have to work from here now, not in the office. So it's difficult to say what the exact effect is going to be. But we do know where people migrate, where they are, they'll need air conditioning and refrigeration. It's just different going into this year. We're seeing a little of that, but it's -- again, it's still too early to tell because we're not in the heat of the season.

在這一點上我會說不。現在是賽季初。它仍然很酷。我們還沒有進入這個季節的核心。同樣，這對我們來說仍然是一個很大的未知數，它可能會產生很大的影響，也可能會產生很小的影響。我們真的不知道。任何被冷藏的產品或人員，都可能有製冷和空調。所以需要製冷劑。當你看到建築物現在被關閉，人們在家工作時，這就是一種影響。對寫字樓的舒適製冷有影響。它甚至可能是住宅有影響，更多的人在家工作，它可能是相反的，嘿，我在家裡修理我的系統，因為我現在必須在這里工作，而不是在辦公室.所以很難說確切的效果是什麼。但我們確實知道人們遷移到哪裡，他們在哪裡，他們需要空調和製冷。進入今年就不同了。我們看到了一些，但它——再一次，現在下結論還為時過早，因為我們還沒有進入旺季。

(Operator Instructions) With no other questions holding, I'll turn the conference back to management for any additional or closing comments.

（操作員說明）在沒有其他問題的情況下，我會將會議轉回管理層以徵求任何其他或結束意見。

Thank you, operator. Again, we apologize for the late start, but I'd like to thank all of our employees, particularly those -- particularly during these extraordinary times for their hard work and dedication, and I want to again thank our long-term -- long-time shareholders and those that recently joined us for their support.

謝謝你，運營商。再次，我們為遲到的開始表示歉意，但我要感謝我們所有的員工，尤其是那些 - 特別是在這些非常時期的辛勤工作和奉獻精神，我想再次感謝我們的長期 - 長期時間股東和最近加入我們的支持者。

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

感謝大家參加今天的電話會議，我們期待在第二季度業績後與您交談。大家晚上好

Ladies and gentlemen, that will conclude today's call. We thank you for your participation. You may disconnect at this time, and have a great day.

女士們，先生們，今天的電話會議到此結束。我們感謝您的參與。您此時可能會斷開連接，祝您度過愉快的一天。