Hudson Technologies, Inc. (NASDAQ:HDSN) Q4 2022 Results Conference Call March 8, 2023 5:00 PM ET Company Participants Jen Belodeau - Investor Relations Brian Coleman - President & Chief Executive Officer Nat Krishnamurti - Chief Financial Officer Conference Call Participants Ryan Sigdahl - Craig Hallam Capital Group Gerry Sweeney - ROTH Capital Chip Moore - EF Hutton Operator Good day everyone, and welcome to the Hudson Technologies' Fourth Quarter 2022 Earnings Call. At this time, all participants have bee ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | | | Name of each exchange on which | | --- | --- | --- | | Title of Each Class | Trading Symbol(s) | registered | | Common stock, $0.01 par value | HDSN | NASDAQ Capital Market | For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ...

Hudson Technologies, Inc. (NASDAQ:HDSN) Q3 2022 Earnings Conference Call November 2, 2022 5:00 PM ET Company Participants John Nesbett - Investor Relations Brian Coleman - Chairman, President & Chief Executive Officer Nat Krishnamurti - Vice President, Secretary & Chief Financial Officer Conference Call Participants Ryan Sigdahl - Craig-Hallum Group Gerry Sweeney - ROTH Capital Chip Moore - EF Hutton Operator Good afternoon, ladies and gentlemen and welcome to today's Hudson Technologies Third Quarter 2022 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number 1-13412 Hudson Technologies, Inc. (Exact name of registrant as specified in its charter) | New York | ...

Financial Data and Key Metrics Changes - Hudson Technologies reported revenue of $103.9 million for Q2 2022, a 72% increase compared to $60.5 million in Q2 2021, driven by increased selling prices for certain refrigerants [24] - Gross margin increased to 55% in Q2 2022 from 36% in Q2 2021, primarily due to significant price increases without a material rise in the cost basis of refrigerants sold [25] - Operating income for Q2 2022 was $49.8 million, compared to $14.4 million in Q2 2021, while net income rose to $39.8 million or $0.89 per basic share, up from $11.3 million or $0.26 per basic share in the same period of 2021 [26] - The company reduced its leverage ratio to 0.73:1 for the trailing 12 months ended June 30, 2022, down from 4.18:1 a year earlier [27] Business Line Data and Key Metrics Changes - The company achieved exceptionally high gross margins, although it anticipates a slight moderation in margin performance for the full year due to rising inventory costs and stabilization in sales prices [8] - Hudson's EMERALD brand of reclaimed refrigerants is gaining market recognition, contributing to its leadership role in sustainable refrigerant management [21] Market Data and Key Metrics Changes - The AIM Act mandates a 10% step-down in production and consumption allowances for virgin HFCs in 2022 and 2023, with a 40% baseline reduction in 2024, creating opportunities for reclaimed refrigerants [10] - The company is forming new partnerships to comply with various state and federal regulations, particularly in California, which requires a minimum of 10% reclaimed refrigerant in factory-charged equipment [12] Company Strategy and Development Direction - Hudson Technologies is focused on developing strategic relationships with customers to provide sustainable refrigerant products and services as the industry transitions to cleaner equipment [9] - The company aims to increase annualized revenue to over $400 million by 2025, with gross margins expected to settle around 35% [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the HVAC aftermarket's strength despite potential recessionary headwinds, noting that the mandated phasedown of HFCs could insulate the industry [18] - The company is committed to fostering sustainable cooling practices and providing products and services to support the transition to cleaner refrigerants [19] Other Important Information - Hudson Technologies paid down an additional $10 million of term loan debt in Q2 2022, resulting in strong liquidity with $93 million in cash and revolver availability [28] - The company is investing in its ERP system to meet the reporting requirements of the AIM Act, which may lead to further disruptions [56] Q&A Session Summary Question: Can you break out how much was from the price increase versus structural or normal gross margin within that 55%? - Management indicated it is difficult to bifurcate the gross margin but noted that the higher price throughout Q2 contributed significantly to the gross margins achieved [39] Question: What are your thoughts on channel inventory for R-22 and HFCs? - Management stated that R-22 pricing remains constant, with expectations that people will buy as needed, while there may be slightly more HFC inventory in the chain than normal [43][44] Question: Can you comment on the reclamation growth trend? - Management noted that reclamation has been somewhat disappointing but expects it to pick up in the latter half of the season as contractors accumulate recover gas [46] Question: What type of exposure does Hudson have with Lennox and potential incremental business? - Management indicated that all business with Lennox should be incremental, as there is likely little direct relationship with Lennox dealers currently [50] Question: How do you see the path to mid-30% margins by 2025? - Management believes the targets are conservative and achievable, with expectations of significant cash flow available for acquisitions and investments in the business [54][56] Question: Do you have enough capacity to handle HFCs, especially mixed HFCs? - Management expressed confidence in their current capacity and ongoing investments to handle the complexities of HFCs, ensuring they can meet future demands [68]

Financial Performance & Targets - Hudson Technologies achieved a 149% revenue growth in Q1 2022, reaching $84 million[2,3] - The company's gross profit for Q1 2022 was $45 million, with an operating income of $38 million[3] - The targeted annual operating model for 2023 includes revenue of ~$350+ million, gross profit of $105 million, and operating income of $72 million[4] Industry Disruption & Market Opportunity - The installed base of >100 million HFC units will require transition to next-generation equipment[2,20,25] - Hudson Technologies holds approximately 35% of the U S reclamation market share[2,17,22] - The AIM Act is expected to create a 40% reduction in virgin HFC supply in 2024[15] Regulatory & Environmental Factors - The AIM Act mandates the EPA to promote reclamation opportunities[26] - HFC emissions could potentially produce up to 19% of CO2 emissions by 2050[7] - The company's HFC allocation allowance for 2022 is equal to ~3 million metric tons exchange value equivalents, or 1% of total HFC consumption allocation[15] Strategic Positioning - Hudson handles in excess of 200,000 reclaim cylinders per year[17] - The company has a diverse customer base of 7,000+ customers and 40+ facilities and stocking points[12]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) This section presents the company's unaudited financial statements, management's analysis, market risk disclosures, and internal controls for the reporting period [Financial Statements (unaudited)](index=3&type=section&id=Item%201%20-%20Financial%20Statements%20(unaudited)) This section presents Hudson Technologies' unaudited consolidated financial statements for Q1 2022, encompassing balance sheets, income statements, equity, and cash flows, along with detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The company's total assets increased to $246.8 million as of March 31, 2022, from $215.7 million at year-end 2021, driven by higher trade accounts receivable and inventories, while equity grew significantly due to strong net income Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 (unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $152,326 | $119,949 | | **Total Assets** | **$246,842** | **$215,715** | | **Total Current Liabilities** | $46,859 | $64,439 | | **Total Liabilities** | **$145,946** | **$144,776** | | **Total Stockholders' Equity** | $100,896 | $70,939 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 2022, the company reported a significant turnaround with revenues surging to $84.3 million and net income of $29.6 million, a substantial improvement from the prior-year period's net loss Q1 2022 vs Q1 2021 Performance (in thousands, except per share amounts) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | **Revenues** | $84,338 | $33,780 | | **Gross Profit** | $45,820 | $9,138 | | **Operating Income** | $38,298 | $1,692 | | **Net Income (Loss)** | $29,555 | $(1,076) | | **Net Income (Loss) per Share – Diluted** | $0.63 | $(0.02) | [Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity increased from $70.9 million to $100.9 million in Q1 2022, primarily driven by the quarter's strong net income of $29.6 million - The accumulated deficit decreased from **$(45.8) million** at the start of the year to **$(16.3) million** as of March 31, 2022, due to the strong net income of **$29.6 million**[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company generated $5.1 million in cash from operating activities in Q1 2022, a significant improvement from the prior year, leading to a $1.7 million increase in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | **Cash provided by (used in) operating activities** | $5,066 | $(4,969) | | **Cash used in investing activities** | $(27) | $(290) | | **Cash (used in) provided by financing activities** | $(3,379) | $6,686 | | **Increase in cash and cash equivalents** | $1,660 | $1,427 | [Notes to the Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail the company's refrigerant services business, accounting policies, the impact of the AIM Act, debt refinancing activities, and the status of net operating loss carryforwards - The company is a refrigerant services company providing solutions like reclamation, reuse, and sale of refrigerant gases. It operates as a single reportable segment[18](index=18&type=chunk)[19](index=19&type=chunk) - Under the AIM Act, the EPA is phasing down HFCs. Hudson received a **2022 allocation allowance of approximately 3 million Metric Tons Exchange Value Equivalents**, representing **1% of total HFC consumption**[24](index=24&type=chunk)[26](index=26&type=chunk) - In March 2022, the company refinanced its debt, entering into a new **$85 million Term Loan Facility** and an amended revolving credit facility (Amended Wells Fargo Facility) for up to **$90 million**, resulting in a **$4.7 million interest expense charge** from debt extinguishment[110](index=110&type=chunk)[121](index=121&type=chunk)[130](index=130&type=chunk) - Due to recent profitability, the company utilized **$20.7 million of net operating losses (NOLs)** and reduced its valuation allowance by **$6.0 million**, leaving a remaining allowance of **$9.1 million**, with potential for further release if profitability continues[52](index=52&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q1 2022 performance to a **149% revenue increase** driven by higher selling prices and volume, significantly improving gross margin and working capital, alongside successful debt refinancing Q1 2022 vs Q1 2021 Results of Operations (in millions) | Metric | Q1 2022 | Q1 2021 | Change | | :--- | :--- | :--- | :--- | | **Revenues** | $84.3 | $33.8 | +149% | | **Cost of Sales** | $38.5 | $24.6 | +56% | | **Gross Profit** | $45.8 | $9.1 | +403% | | **Net Income (Loss)** | $29.6 | $(1.1) | +$30.7M | - The revenue increase was primarily due to higher selling prices for certain refrigerants, fueled by increased demand and limited industry supply, as well as increased sales volume[158](index=158&type=chunk) - In March 2022, the company executed a major debt refinancing, including an Amended and Restated Credit Agreement with Wells Fargo for up to **$90 million** and a new **$85 million Term Loan Facility** with TCW Asset Management, maturing in **2027**[170](index=170&type=chunk)[181](index=181&type=chunk) - The termination of the prior term loan facility resulted in a one-time charge of **$4.7 million** recorded as interest expense in Q1 2022[190](index=190&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company identifies primary market risks as interest rate fluctuations on variable-rate debt, with a 1% change affecting annual interest expense by $0.9 million, and volatility in the refrigerant market - The company is exposed to interest rate risk on its Amended Wells Fargo Facility and Term Loan Facility. A **1% change** in the interest rate would result in an approximate **$0.9 million annual effect** on interest expense[206](index=206&type=chunk)[207](index=207&type=chunk) - The company faces market risk from fluctuations in the demand, price, and availability of refrigerants, which could materially affect revenue and inventory values[208](index=208&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204%20-%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[209](index=209&type=chunk) - No material changes to the company's internal control over financial reporting were identified during the first quarter of 2022[210](index=210&type=chunk)[211](index=211&type=chunk) [Part II. Other Information](index=32&type=section&id=Part%20II.%20Other%20Information) This section provides updates on risk factors and lists exhibits filed with the Form 10-Q [Risk Factors](index=32&type=section&id=Item%201A%20-%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its Form 10-K for the fiscal year ended December 31, 2021 - There have been no material changes to the risk factors detailed in the Company's Form 10-K for the year ended December 31, 2021[213](index=213&type=chunk) [Exhibits](index=33&type=section&id=Item%206%20-%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley and Interactive Data Files for financial reporting List of Filed Exhibits | Exhibit Number | Description | | :--- | :--- | | 31.1 | CEO Certification (Sarbanes-Oxley Section 302) | | 31.2 | CFO Certification (Sarbanes-Oxley Section 302) | | 32.1 | CEO Certification (Sarbanes-Oxley Section 906) | | 32.2 | CFO Certification (Sarbanes-Oxley Section 906) | | 101 | Interactive Data Files (XBRL) | [Signatures](index=34&type=section&id=Signatures) This section contains the authorized signatures for the Form 10-Q report [Signatures](index=34&type=section&id=Signatures) The Form 10-Q report was duly authorized and signed on May 10, 2022, by Brian F. Coleman, Chairman of the Board, President, and Chief Executive Officer, and Nat Krishnamurti, Chief Financial Officer - The report was signed on **May 10, 2022**, by Brian F. Coleman (CEO) and Nat Krishnamurti (CFO)[218](index=218&type=chunk)

Hudson Technologies, Inc. (NASDAQ:HDSN) Q1 2022 Earnings Conference Call May 4, 2022 5:00 PM ET Company Participants Jen Belodeau - Investor Relations Brian Coleman - President and Chief Executive Officer Nat Krishnamurti - Chief Financial Officer Conference Call Participants Ryan Sigdahl - Craig-Hallum Operator Good afternoon, ladies and gentlemen and welcome to the Hudson Technologies’ First Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode and we will open ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number 1-13412 Hudson Technologies, Inc. (Exact name of registrant as specified in its charter) New York 13-3641 ...

Financial Data and Key Metrics Changes - For Q4 2021, Hudson recorded revenues of $37.8 million, a 71% increase compared to $22.1 million in Q4 2020, driven by higher selling prices for certain refrigerants [19] - Gross margin improved to 45% in Q4 2021 from 25% in Q4 2020, primarily due to higher selling prices [20] - For the full year 2021, revenues reached $192.7 million, a 31% increase from $147.6 million in 2020, with a gross margin of 37% compared to 24% in 2020 [23] Business Line Data and Key Metrics Changes - The company expects gross margin performance in 2022 to be in the low 30% range, with potential improvements as reclamation volumes increase [10][21] - Operating income for Q4 2021 was $9.3 million, compared to an operating loss of $1.7 million in Q4 2020 [22] Market Data and Key Metrics Changes - The average selling price of refrigerants increased sequentially from Q3 to Q4 2021, contrary to expectations of stability [8] - The AIM Act mandates a 10% step-down in production and consumption allowances for Virgin HCFs in 2022, with further phasedowns over the next 15 years [13] Company Strategy and Development Direction - Hudson aims to leverage its position as a leading reclaimer to support the transition away from Virgin HCFs, with a focus on sustainability and reclamation capabilities [14][17] - The company is actively pursuing opportunities to assist OEMs in meeting California Air Resources Board (CARB) requirements for reclaim refrigerants [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, anticipating revenues could exceed $270 million if pricing trends continue [8] - The company highlighted the importance of reclamation in maintaining necessary HSC supply levels amid regulatory changes [13] Other Important Information - Hudson completed refinancing its debt with a new $85 million term loan and increased its ABL facility to $90 million, improving its cost of capital [11][25] - The company's leverage ratio improved significantly to 1.93:1 for the trailing 12 months ended December 31, 2021, down from 5.42:1 in the previous year [24] Q&A Session Summary Question: How is the HSC recovery in the market going? - Management noted that past reclamation volumes were lower than expected, but current regulations and stakeholder involvement may drive growth in reclamation [31][36] Question: Is pricing pressure due to supply chain issues or the AIM Act? - Management indicated that both supply chain issues and the AIM Act are contributing to pricing increases, with supply chain challenges expected to persist in the near term [37] Question: Are there any shifts in buying patterns for refrigerants this year? - Management suggested a potential hybrid approach to inventory, with some companies possibly stocking more products earlier due to concerns about availability [39] Question: What are the current price assumptions for R-22 and R-410A? - Management stated that R-22 pricing is around $30 per pound, while HFC pricing is above $10 per pound, reflecting significant increases throughout 2021 [41][42] Question: How does the gross margin expectation for 2022 compare to 2024 targets? - Management expects low 30% gross margins to be sustainable, with potential for improvement as reclaimed volumes grow, particularly in 2023 [43][44] Question: Can you discuss the debt refinance process and lender selection? - Management explained that they engaged a broad range of lenders and chose TCW due to their strong relationship and understanding of the business [48][50]