Perimeter Solutions(PRM) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Q3 revenue increased 102% to $288.4 million, and year-to-date sales increased 81% to$ 474.7 million [42] - Q3 adjusted EBITDA rose 177% to $170.4 million, and year-to-date adjusted EBITDA increased 189% to$ 247.4 million [42] - LTM adjusted EBITDA reached $259 million, reflecting an 18% CAGR over the past 15 years [29][30] - Free cash flow for Q3 was$ 179.1 million, with year-to-date free cash flow at $185.3 million [47][48] Business Line Performance - Fire Safety Q3 revenue increased 113% to$ 251.8 million, with adjusted EBITDA up 181% to $157.5 million [39] - Specialty Products Q3 sales grew 50% to$ 36.6 million, with adjusted EBITDA up 137% to $12.9 million [41] - Suppressants business benefited from the transition to fluorine-free foam, maintaining a 99% win rate at FAA 139 compliant airports [25][26] Market and Operational Highlights - Retardants business demonstrated criticality and complexity, with successful operations in extreme conditions such as the Yellowknife wildfire evacuation [14][17] - Suppressants business emerged as a market leader in fluorine-free foams, driving high win rates and creating a large installed base for future aftermarket sales [25][26] - Specialty Products delivered approximately 10,000 bins in 2024 with a single-digit issue rate, showcasing exceptional execution [28] Strategic Direction and Industry Competition - Company focuses on three operational value drivers: profitable new business, productivity improvements, and value-based pricing [7][8] - Capital allocation priorities include internal reinvestment, M&A, share repurchases, and special dividends, with over$ 200 million in cash and LTM net leverage of 1.7x [32][33][51] - Active search for M&A targets to apply the value driver operating strategy and increase EBITDA and free cash flow [36][37] Management Commentary on Operating Environment and Outlook - Management highlighted the normalization of the 2024 fire season compared to 2023, driving strong financial performance [39] - Company expects to maintain elevated spending in R&D and field service to support customer missions [42] - Management remains confident in driving higher adjusted EBITDA in future years with similar end-market conditions [31] Other Important Information - Company plans to re-domicile its parent company from Luxembourg to Delaware in November 2024, aiming to reduce regulatory complexity and improve tax profile [50] - Share repurchase program has returned 137% on $127.4 million deployed, repurchasing 14% of the initial IPO share count [49] Q&A Session Summary Question: Fire Safety Volume and Growth Drivers - During Q3, there were periods where the aerial firefighting industry operated at max capacity, limiting additional retardant sales [54] - Long-term growth in fire safety volumes is driven by increased air tanker capacity, public sector investments, and company’s own operational upgrades [55][56] Question: Capital Deployment and Timing - Company will remain patient with capital allocation, prioritizing internal reinvestment, M&A, and share repurchases, with special dividends as a last resort [58] Question: Regional Focus and Seasonality - Company operates globally, with key markets in Central and South America, Europe, the Middle East, Asia, and Australia, each with distinct wildfire seasonality [61][62]