Greetings. Welcome to the Hudson Technologies Fourth Quarter and Year-End 2025 Earnings Call. Please be aware that this conference is being recorded. I will now hand the conference over to your host, Jen Belodeau of IMS Investor Relations. You may proceed.

Thank you. Good evening, and welcome to our conference call to discuss Hudson Technologies' financial results for the fourth quarter and year-end 2025. On the call today are Ken Gaglione, Hudson’s President and Chief Executive Officer; Brian Bertaux, CFO; and Kate Houghton, Hudson's Senior Vice President of Sales and Marketing. I'll now take a moment to read the safe harbor statement. During the course of this conference call, we will make certain forward-looking statements. All statements that address expectations, opinions or predictions about the future are forward-looking statements. Although they reflect our current expectations and are based on our best view of the industry and of our businesses as we see them today, they are not guarantees of future performance. Please understand that these statements involve a number of risks and assumptions, and since those elements can change and in certain cases, are not within our control, we 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. During the call, we will also be referring to certain non-GAAP financial measures. For a detailed reconciliation of these measures to GAAP financial measures, we refer you to the press release issued earlier this afternoon and the 8-K filed this afternoon with the SEC. With that, we will now turn the call over to Ken Gaglione. Please go ahead, Ken.

Good evening, everyone, and thank you for being here. Since taking on the role of CEO at Hudson in November, I've had the opportunity to connect with many of you, and I’m glad to address a larger group of investors and analysts tonight. The past three months have been quite busy and productive, working alongside our internal teams and key customers. I've observed numerous positive changes and significant progress since my last time at Hudson, and I’ve found the foundation of the company remains robust. Hudson is made up of a talented group of knowledgeable professionals dedicated to providing innovative and sustainable refrigerant products, services, and technology that our customers need in the ever-evolving HVAC landscape. I’m thrilled to return and lead Hudson as we embark on our next chapter. Before discussing financial results, I want to share my vision for Hudson, along with our strategy and priorities moving forward. Hudson has been a frontrunner in refrigerant distribution and an innovator in reclamation and refrigerant management services for many years; our founder was a pioneer in refrigerant reclamation in the U.S., successfully navigating previous refrigerant phase-outs: CFCs in the late '90s and HCFCs in the mid-2000s, and now we're currently transitioning through another phase-down of HFCs to HFOs. Our core refrigerant reclamation sales and services remain central to our growth strategy, which aligns with our commitment to refrigerant life cycle management and sustainability, ensuring optimal system performance through environmentally responsible reclaimed refrigerants. Numerous growth opportunities support this core mission. In the short term and as part of our capital allocation strategy, we will focus on investing in a few key areas: infrastructure, inventory, and ERP. Our infrastructure investment will enhance our separation technology and automation, ensuring we are well prepared to meet the changing needs of our customers with new, more complex HFO refrigerant blends. We are also investing in inventory essential for our operations and to maintain our reputation for promptly supplying our customers with the refrigerants they need. We realized we were somewhat under-stocked at the end of 2024, which resulted in some order misdeliveries during the 2025 selling season, a situation we corrected in the fourth quarter. We are committed to building up our inventory to deliver the service excellence our customers expect. Recently, we went live with a new ERP system in February 2026. This upgrade will enhance our operational connectivity and create a more efficient platform for us to reliably serve customers. Like many ERP implementations, we've faced some startup challenges, which Brian will elaborate on later. We are also focusing on expanding our service capabilities in the commercial market organically and strategically. In the short time since I've returned, our internal teams have identified various opportunities to leverage our existing technology and expertise to offer new services to our customer base. The HVAC market has many servicing needs, and we believe we can capture more of that demand. Examples include special handling of new refrigerant blends, alternative methods to recover refrigerant from underserved market segments, and HVAC system optimization services, among others. Furthermore, we will maintain a disciplined approach to acquisitions that add value and strength to our geographical presence. Our recent acquisition of Refrigerants Inc. exemplifies this strategy, boosting our foothold in the western U.S. for both recovered refrigerant and distribution. Lastly, we aim to return capital to our shareholders through an opportunistic stock repurchase program. We repurchased $20 million in stock during 2025 and plan to continue this in 2026. I want to acknowledge that these initiatives are built upon the strong foundation handed over to me by my predecessor, for which I am genuinely thankful. I believe this is not the time for transformative changes as it’s unnecessary; rather, we should diversify our revenue streams to reduce seasonality and dependence on a few dominant refrigerants. Our team is committed to seizing the opportunities in front of us this year. Now, I will briefly cover our fourth quarter and full-year results before handing the call over to my colleagues. As many of you are aware, Q4 is historically our weakest in terms of sales volume due to it falling outside our nine-month selling season. However, we achieved impressive revenue growth of 28% in the fourth quarter of 2025, primarily linked to strong sales volume, which we view as a promising indicator going into 2026 and confirms our commitment to driving volume by exceeding customer expectations. Additionally, in Q4, we completed our acquisition of Refrigerants Inc., enhancing our access to the recovered refrigerant supply chain in the Western United States. Here’s a brief overview of our full-year 2025 financial performance. We experienced a 4% growth for the year, reaching $246.6 million in annual sales volume with a growth rate of 6%. Our gross margin stood at 25%, and we reported a non-GAAP adjusted net income of $19.7 million or $0.44 per diluted share. Notably, 2025 marks our second consecutive year achieving an 18% increase in reclamation volume, directly tied to our contractor-level activities. As discussed in previous calls, refrigerant recovery is essential to reclamation, and Hudson has been at the forefront of raising awareness among contractors about its importance from both sustainability and economic perspectives. Our acquisitions of USA Refrigerants and Refrigerants Inc. have significantly enhanced our ability to secure recovered refrigerant, expanding our recovery team and geographic reach. Expanding reclamation as a vital element of our supply chain will be critical as the EPA continues to reduce consumption allowances in 2029. Now, about our work with the Defense Logistics Agency, or DLA. Last year, we reported $38 million in revenue from our DLA contract. During the fourth quarter, we announced the renewal of this contract to support the U.S. military as a prime contractor. In January 2026, we were informed that a competitor had filed a bid protest related to the DLA's proposal evaluation process and the contract award to Hudson Technologies. As a result, our contract award has been rescinded while the DLA reviews its processes. Although this situation is disappointing, Hudson has a proven ten-year partnership with the DLA, and we will continue to provide logistics support under our existing contract through 2026. We are committed to remaining a valuable partner to the DLA while this issue is resolved and will offer updates as we receive more information. In conclusion, I am very pleased with our solid finish to 2025 and energized for the growth opportunities ahead. Now, I will hand the call over to Kate Houghton, our Senior Vice President of Sales and Marketing, to provide more details on Hudson's market opportunities.

Thank you, Ken, and good evening, everyone. We executed well in the fourth quarter and delivered increased sales volume in what is historically our seasonally slowest quarter when a large portion of our customers transition from cooling applications to heating. In fact, our execution in the back half of 2025 offset what had been a late start to our 9-month cooling season. It's still relatively early in the year, but as we begin the 2026 cooling season, we currently see supply and demand being balanced in the market with some slight refrigerant price appreciation. At the close of 2025, the average price of HFCs was slightly below $6 per pound, and as we report to you today, it's slightly above $6 per pound. As Ken mentioned, for the second consecutive year, we achieved an 18% increase in reclamation volume. We believe our solid growth reflects our successful grassroots effort to promote recovery and reclamation activities to the field technicians who facilitate the recovery and return process, as well as the expanded recovery capabilities resulting from our acquisitions of USA Refrigerants and Refrigerants Inc. During the fourth quarter, we continued to actively engage with our refrigeration technician and contractor partners to highlight the environmental and economic benefits of recovering and returning refrigerants rather than venting refrigerant, and we will continue these efforts as we move through 2026 and beyond. In addition to our industry outreach during 2025, we also launched two innovative reclaim pilot programs to promote the recovery and reclamation process and technology. In September, we began our partnership with DC Sustainable Energy Utility, or DCSEU, to establish the nation’s first refrigerant recovery and reclamation pilot in Washington, D.C. The program is linked to DCSEU's greenhouse gas emission goals. Through this pilot, Hudson provides HVAC contractors with training on recovery best practices, supplies proper storage containers for used refrigerants, covers shipping and logistics, and offers financial incentives for recovered refrigerant. The pilot is off to a strong start with early positive results. Participating contractors have avoided 600,000 pounds of equivalent CO2 emissions by reclaiming with Hudson, and the program is set to expand to a wider range of participating contractors this year. We are encouraged that the CSU program is also considering refrigerant recovery as greenhouse gas CO2e reduction rather than the typical view of reduced energy consumption. This approach is key to encouraging utilities around the country to accelerate the support of refrigerant reclamation in decarbonization efforts. In December of 2025, we announced that Hudson was selected to support the California Air Resources Board, or CARB, with their REFRESH pilot program, the state's first program to incentivize refrigerant recovery and reclamation. In this pilot, Hudson will partner with contractors who are part of the California Energy Commission's Equitable Building Decarbonization Direct in-Store program to provide training on safe and efficient recovery practices and as a purchaser of recovered HFCs and HCFCs for reclamation. We're very excited to be part of these innovative new programs and are optimistic that we'll continue to see additional opportunities as more state and local governments adopt legislation mandating the use of reclaimed refrigerants. Finally, I'd like to take a minute to address the recent development at the EPA revoking the endangerment finding established in the Obama administration. The endangerment finding has served as a basis for regulating certain pollutants, including HFCs, under the Clean Air Act. The recession of this endangerment finding primarily limits the EPA's ability to develop further HFC regulations under the Clean Air Act, and we don't believe it will affect the AIM Act's independent statutory authority for the HFC phase-down. OEMs and refrigerant producers are already well on their way in developing next-generation lower GWP alternatives to HFC refrigerants and equipment, and Hudson remains in a strong position to reclaim and provide HFCs to meet the anticipated continued demand as these 100 million-plus units reach the end of their useful lives. As we begin to move through 2026, I want to echo Ken's comments about our optimism for what lies ahead for Hudson. We have a strong foundation to build from, which includes our long-standing customer base, leadership position in the supply of both surgeon and reclaimed refrigerants of all types, innovative thinking to engage nontraditional industry partners in the growth of refrigerant recovery, sophisticated field service capabilities, and the ability to leverage our proprietary technology and expertise to drive growth. With our renewed focus on expanding our core business through complementary opportunities and a focus on strategic expansion in complementary areas, we believe we are well positioned to grow our leadership role in the marketplace. Now I'll turn the call over to Brian Bertaux to review our fourth quarter and full year 2025 results. Go ahead, Brian.

Thank you, Kate. First, I'll review our Q4 '25 financial results with a comparison to Q4 '24. We recorded $44.4 million in revenue, an increase of 28%, primarily driven by increased sales volume. As Kate noted, our strong sales volume execution in the back half of 2025 more than offset what had been a late start to our 9-month selling season. We posted gross profit of $3.5 million compared to $5.8 million in Q4 '24. The Q4 '25 gross profit reflected the impact of $4.2 million of inventory-related costs, including a lower of cost or market adjustment resulting from the fourth quarter inventory build. Hudson recorded SG&A expenses of $13.9 million compared to $8 million in Q4 '24. SG&A in the '25 quarter included $4 million of executive severance costs. Excluding the $4 million severance costs, non-GAAP adjusted SG&A was $9.9 million compared to $8 million in Q4 '24, with the variance related to increased staffing. Operating loss was $11.2 million compared to an operating loss of $3.2 million in Q4 '24. The Q4 '25 operating loss includes $8.2 million in inventory and the $4 million severance costs. Non-GAAP adjusted operating loss, which excludes the $4 million of severance-related costs, was $7.2 million compared to Q4 '24 operating loss of $3.2 million. We recorded a net loss of $8.6 million or $0.20 per diluted share, which includes the after-tax impact of the $8.2 million of previously described costs, compared to a net loss of $2.6 million or $0.06 per diluted share in Q4 '24. Non-GAAP adjusted net loss was $5.4 million or $0.13 per diluted share, which excludes the after-tax impact of the $4 million executive severance cost, compared to a non-GAAP net loss of $2.6 million or $0.06 per share for Q4 '24. Turning to the full year, Hudson posted $246.6 million in revenue, a 4% increase from 2024, and that increase was primarily related to a 6% increase in sales volume, which was partially offset by slightly lower pricing. Revenue from our DLA contract was $38 million in 2025. 2025 gross margin was 25.2% compared to 27.7% in 2024. This reflects slightly lower refrigerant market prices and higher freight costs. 2025 SG&A was $40.2 million compared to $33 million in 2024. Non-GAAP adjusted SG&A was $36.2 million compared to $32.6 million in 2024. Excluding the $4 million of severance costs, the increase in SG&A includes the midyear 2024 increase to our sales staff. The company recorded operating income of $18.6 million compared to $29.3 million in 2024. Non-GAAP adjusted operating income was $22.6 million compared to $29.7 million in 2024. The decrease from 2024 reflects the aforementioned lower gross profit and increased SG&A costs, primarily from increased staffing. Hudson recorded net income of $16.7 million or $0.37 per diluted share compared to net income of $24.4 million or $0.52 per diluted share in 2024. Non-GAAP adjusted net income and diluted earnings per share were $19.7 million and $0.44, respectively, compared to non-GAAP EPS and diluted shares of $24.7 million and $0.52, respectively, for 2024. The company's unlevered balance sheet remains strong at year-end with $39.5 million of cash. During the quarter, we demonstrated our commitment to our capital allocation strategy of organic and strategic growth and opportunistic share repurchases. In Q4 '25, we invested in restocking inventory, acquired Refrigerants Inc., and repurchased $14 million of company stock. The investment in inventory at year-end ensures that we are well positioned for the 2026 selling season. Consistent with our capital allocation strategy, we repurchased $20 million of common stock in 2025, and we expect to continue to pursue opportunistic buybacks in 2026 with our $20 million authorization. As Ken noted, we recently went live with a new ERP system that we expect will add activity to our operations and provide a better platform for reliably serving our customers. Like many new ERP implementations, we have experienced some start-up inefficiencies in Q1 2026. Despite that headwind, we expect Q1 2026 revenue to increase by a low to mid-single-digit percentage compared to Q1 2025, and we don't expect the ERP-related inefficiencies to persist in the second quarter and forward. Now I'll turn the call back to Ken for his closing remarks.

Thank you, Brian. So 2025 was a year of notable changes and foundational progress for Hudson. We enter 2026 energized by the opportunities we see to grow our leadership role as a provider of sustainable refrigerant and reclamation products, technologies, and services through strong execution as well as through our strategy to expand our core capabilities by leveraging new opportunities in adjacent markets. Operator, we'll now open it up for questions.

First question comes from Gerry Sweeney with ROTH Capital.

I just wanted to talk about some of your key focuses going forward in organic and accretive growth. Specifically, I wanted to understand your thoughts on potential opportunities in service, HVAC optimization, and improving the focus on refrigerants and reclamation while also addressing seasonality.

Absolutely, Gerry. Thanks for the question. I’ll provide some additional insight on that. When people consider services in the HVAC industry, they usually think of contracting services, like the technicians who come to your home. However, that’s not exactly what we’re referring to. Our discussion about expanding services encompasses various types that are often overlooked, such as chiller operations. This includes proactive services where we monitor and evaluate chiller performance. We assess various aspects of chiller operation, which our services group has been doing for some time. Furthermore, we see potential in offering services for new infrastructure capabilities related to A2L refrigerants, HFO refrigerants, and complex HFO refrigerant blends. We believe we have a unique advantage in the marketplace to balance, package, and redeploy these refrigerants effectively.

Got you. And when you're talking chillers, you're referencing like commercial sized opportunities.

Correct. Yes.

How do you go about opening up this opportunity? Obviously, Hudson has had a service component that has been around for years. I think it's received a lot of attention from the investment community, but maybe not as much from within the company. I'm curious about how you developed this aspect.

Yes. Great question, Jerry. So thinking about it, as Ken touched upon, thinking about taking our services in a more proactive manner versus an emergency response. So Hudson is very well known in the industry for an emergency response to large chiller built systems. Taking our expertise into that stage before you have to have an emergency response, how do you better manage that chiller, how do you proactively think about it as an asset, and all the things that go into that with the refrigerant circuit is one of those areas that we're focusing on and spending more time on lightly.

Got you. And one more question. This may be very early in the process, but maybe do you have any aspirational targets as to where revenue could be in terms of maybe opportunities outside just direct refrigerant distribution. So maybe a balancing perspective.

Yes. That's a little hard to say, but we do have some targets we're developing, Jerry, in terms of percentages of sales. As I said earlier, the key for us is to reduce our dependency on certain refrigerants as we go forward into our strategic plan. So I think we'll be able to give you some guidance on that, a little better guidance on that in the coming months. But right now, it's a little bit early to say.

Next question is from Ryan Sigdahl with Craig Hallum.

This is Matthew Raab on for Ryan. I just want to start on HFC pricing, like it seems like things are mostly stable. I think you mentioned slightly above $6 a pound. I guess just any update on the trends you're seeing whether it be inventory, what's going on in the channel? What you're hearing from tax in the field? And then I don't know if I caught it, was there any change in expectation on pricing for 2026 as a whole?

Yes, that's a great question, Matthew. Thank you for that. At the beginning of the year, the pricing for 410A, the primary HFC refrigerant, was just below $6 per pound. Currently, it's slightly above $6 per pound. The market appears balanced regarding supply and demand, and we aren't observing the shortages and disruptions we experienced last year. We are noticing signs of slight price increases. It's still early in the year, and in some areas like Cliff Lake, New Jersey, there are two feet of snow on the ground, so not many people are thinking about turning on their ACs yet. However, we anticipate continued upward price appreciation.

Understood. Maybe moving over to I guess, broadly, do you have any expectation for the mix in '26? We've heard from some of the OEMs that the aftermarket demand for HFO is going to kick in more so in the second half of '26. Do you have any thoughts on what that mix could be for Hudson? And then any commentary maybe on HFO pricing versus HFC pricing would be helpful.

Let me address that, Ryan. The demand for HFO from a company like Hudson is primarily related to service, specifically aftermarket demand. The development for HFO is in progress for first fill and OEM, as you noted. So I do not anticipate a significant increase in HFO demand from our end in the first part of 2027. We recognize the current situation; we understand it and know how to manage it. However, regarding continuous service demand, I believe it will not be until the latter half of this year, and it's more likely to materialize early next year.

The next question is from Austin Moeller with Canaccord.

So just my first question here. How much cylinder inventory do you expect to need to meet demand in 2026? And how close are you to that target given the build?

We really don't speak to the cylinders. However, we have the inventory both in refrigerants and cylinders, again, not to short the market; we leaned in heavy. So we feel ready and equipped to meet all demand for 2026.

Okay. And what do you view as the most important factor this year to improving the gross margin relative to last year? Is it just appreciation in pricing? Or are there other factors we should be focused on?

Well, in addition, I mean pricing is one variable, but we work day in and day out. We use fixed asset investments to automate things and to reduce costs. We have a new ERP system that we spoke about that should provide us efficiencies, better information, and better information to make informed decisions. So with information, with investments in fixed assets and just focus on continuous improvement, we find ways to reduce costs.

The next question comes from Josh Nichols with B. Riley.

This is Matthew Maus on for Josh Nichols. I guess to start off on the inventory build. You mentioned feeling light on inventory at the end of 2024, not having enough firepower in 2025. So I'm wondering at what price levels were you accumulating in 4Q? And how does the full dynamic set up for margins as you sell through the peak season?

Yes. Historically, we have maintained just over six months of inventory on hand over the past seven years. However, as we entered 2024, we were significantly below that level, leading to missed sales. While it didn’t greatly impact us, we strive to ensure we don't miss any sales as it relates to our reliability and service to customers. Therefore, for 2025, we have adjusted our inventory levels back to a more typical standard, targeting around six months of inventory on hand.

Got it. So then with pricing at around like $6 a pound and inventory stock. I'm assuming at similar levels, how should we think about gross margins for 2026 directionally?

Gross margins for 2026. And as we noted in our last call, if there's no real change in pricing, then really our gross margin for '26 should be comparable to '25.

I think that's a fair assumption. We believe we will be stable through the current contract and expect this to continue until the end of the year. That's our projection as well. We've had some positive recent developments, but it's difficult to determine the timing at this point, so I prefer not to comment further. The process they follow is quite complex. However, we remain very optimistic that we will succeed.

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

All right. Thank you, operator. I appreciate everyone's interest in Hudson Technologies. I think you understand that we have a lot of opportunity here for growth. And on behalf of Kate, Brian, and myself, I want to thank our employees, particularly our employees for their commitment to our success. We also want to thank you for your interest and support of Hudson's Technologies mission and our commitment to the sustainable practices around refrigerant life cycle management. At Hudson, that's not just a slogan, it's not just words, it's actually something that we really believe in, and we believe in effective refrigerant life cycle management. We look forward to speaking with you in May to discuss our first quarter 2026 results.

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